^25 
) 9 / a b 



HOW THE STANLEY BILL ( S. 3410 ) 

For Compulsory License of Patents 

IMPERILS INVENTORS, MANUFACTURERS. 

AND THE AMERICAN PATENT SYSTEM. 



TESTIMONY OF INVENTORS, MANUFACTURERS, 
PUBLICISTS AND SCIENTIFIC SOCIETIES WHO 
SUCCESSFULLY OPPOSED A SIMILAR COM- 
PULSORY LICENSE MEASuiiE BEFORE 
THE HOUSE PATENT COMMITTEE 
IN 1912 



Distributed by 

AMERICAN PATENT LAW ASSOCIATION 

614-619 Washington Loan & Trust Building, 

Washington, D. C. 

1922. 



Distributed by 

AMERICAN PATENT LAW ASSOCIATION 

614-619 Washington Loan & Trust Building, 

Washington, D. C. 

to whom application may be made for additional copies. 

Anyone, may freely copy and republish all or any part 
of this pamphlet. 



u<. 



)( 



HOW THE STANLEY BILL ( S. 3410 ) 

For Compulsory License of Patents 

IMPERILS INVENTORS, MANUFACTURERS, 

AND THE AMERICAN PATENT SYSTEM. 



TESTIMONY OF INVENTORS, MANUFACTURERS, 
PUBLICISTS AND SCIENTIFIC SOCIETIES WHO 
SUCCESSFULLY OPPOSED A SIMILAR COM- 
PULSORY LICENSE MEASURE BEFORE 
THE HOUSE PATENT COMMITTEE 
IN 1912 



Distributed bv 

AMERICAN PATENT LAW ASSOCIATION 

614-619 Washington Loan & Trust Building, 

Washington, D. C. 

1922. 



tv^ 






^'- 



SENATE COMMITTEE O^ PATENTS (April— 1922) 

Hiram W. Johnson, of California. Ellison D. Smith, of South Carolina, 

George W. Norris, of Nebraska. A. Owsley Stanley, of Kentucky. 

Frank B. Brandegee, of Connecticut. Edwin S. Broussard, of Louisiana. 
Richard P. Ernst, of Kentucky. 

Communications in opposition to the Stanley Bill (S. 
3410) may be addressed to Senator Hiram W. Johnson, 
United States Senate, Washington, D. C, or to any other 
member of the Committee at the above address. 



^m. Karf Fehni-g. Oct. 1.4, iU^ 



"9 



^9^ 

^<^ 



TABLE OF CONTEXTS 

PAGE 

Preface 1 

Chapter 

I. How Will the Koyalty for ^^Compulsory License" 

be Determined? 4 

II. How will '^Compulsory License" Affect an Inven- 

tor Endeavoring to Dispose of his Invention? . . 15 

TIL HoAv Will ^'Compulsory License" Affect a Con- 
cern Endeavoring to "Suppress" an Invention? 21 

lY. How Will ''Compulsory License" Affect a Patent 
Owner Endeavoring to Develop and Introduce 
an Invention? 25 

V. How Will "Compulsory License" Affect Large- 

scale Invention and Industrial Experimentation? 45 

VI. How Frequent is the "Suppression" of Inventions? 57 

VII. How Will "Compulsory License" Affect the 
Number of Inventions Patented and Made Public? 73 

VIII. Foreign Experience With "Compulsory Work- 
ing" and "Compulsory License" 81 

TX. Will "Compulsory License" conserve Competi- 
tion and Independent Business and the Public 
Welfare? 90 

X. Should Property in Invention, any More than 
Other Forms of Property, be Subject to Confisca- 
tion? as 



PEEFACE. 

On April 6, 1922, Senator Stanley introduced into tlie 
United States Senate a Bill (S. 3410) — understood 
to be a substitute for S. 3325 — providing that every 
patent "shall contain a proviso to the effect that 
if such patent so granted is not worked or i^ut in opera- 
tion so as to result in actual production in the United 
States of the article disclosed in such patent, in reason- 
able quantities, within a reasonable time, from the date of 
its issue, the United States reserves the right to license 
any person or persons for the purpose of the manufacture, 
use, and sale in the United States of the subject matter 
thereof * * * subject to the payment of reasonable 
royalties to be determined by the Commissioner of Patents 
or such other governmental agency as the President may 
direct." 

How the royalty for such "compulsory license" shall be 
determined is not specified in the Stanley Bill, further 
than that it "shall be fixed in accordance with the number 
and value of the articles so manufactured," and that it 
"shall be on an equitable basis according to the circum- 
stances in each case," and that such royalty must be "not 
less than one-half of 1 per centum of the manufacturing 
cost" and "not more than 10 per centum of such cost." 

On April 6, 1922, the Senate Patent Committee held a 
hearing at which the substance of the Bill was discussed. 
Up to that time little opportunity was afforded to inven- 
tors, manufacturers, scientific societies and business men's 
associations to express themselves. 

Another hearing on the Stanley Bill, before the Senate 
Patent Committee , has been set for April 18, 1922, at 



ivhich it is hoped that opposition commensurate to the 
peril threatened hy the Bill may he vigorously expressed. 

^'Oompulsory license" of patents was proposed, ten 
years ago, in the so-called Oldfield Bill, and a report in 
favor of the measure was made by a majority of the then 
House Patent Committee. So overwhelming, however, was 
the opposition to the Oldfield Bill by inventors, manu- 
facturers, publicists, patent lawyers, scientific societies, 
and business] men's associations, that the Oldfield Bill was 
never brought to vote in either branch of Congress. 

The Stanley Bill is, if possible, worse than the Oldfield 
Bill, in that jurisdiction as to '^compulsory license" and 
the royalty therefor is vested, not in the courts, as pro- 
vided in the Oldfield Bill, but in "the Commissioner of 
Patents or such other governmental agenc}^ as the Presi- 
dent may direct," and allows the patent owner no right of 
appeal to the courts to review^ any exercise of such juris- 
diction. 

Under various heads, the folloAving compilation sets 
forth, in the identical words of the witnesses, the import- 
ant parts of the testimony on '^compulsory license" given 
in 1912 before the then House Patent Committee. After 
each quotation, the name of the witness is given, and the 
page of the printed minutes of the Hearing before the 
Committee on Patents, House of Representatives, on H. 
E. 23,417, commonly called the Oldfield Revision and 
Codification of Patent Statutes, Sixty-second Congress, 
Second Session, in which these words occur. 

Everything said in 1912 against ''compulsory license" 
as proposed in the Oldfield Bill applies with even greater 
strength against the Stanley Bill. Whatever conclusions, 
therefore, are derived from the perusal of this compila- 
tion result not from argument but simply from such con- 
viction as an absolutely candid statement of the facts 
must alw^ays carry. 



We recommend, on behalf of inventors, manufacturers, 
and tlie public, all of whom would suffer if the Stanley 
Bill were enacted, that every legitimate effort be made to 
prevent this Bill from becoming law. 

KespectfuUy, 

April, 1922. 

COMMITTEE ON LAWS & RULES, 

W. B. ICerkam, Chairman. 

BY ORDER OF 

Board of Managers, 

AMERICAN PATENT LAW ASSOCIATION, 
Wallace R. Lane^ 
President. 

Arthur L. Bryant_, 
Secretary. 



I. 

HOW WILL THE ROYALTY FOR ^^COMPULSORY 
LICENSE^' BE DETERMINED? 

Tlie Stanley Bill provides tliat every patent "shall con- 
tain a proviso to the effect that if such patent so granted 
is not worked or put in operation so as to result in actual 
production in the United States of the article disclosed 
in such patent, in reasonable quantities, within a reason- 
able time, from the date of its issue, the United States 
reserves the right to license any person or persons for 
the purpose of the manufacture, use, and sale in the 
United States of the subject matter thereof * * * subject 
to the payment of reasonable royalties to be determined 
by the Commissioner of Patents or such other govern- 
mental agency as the President may direct." How 
the royalty for a "compulsory license" shall be de- 
termined is not disclosed, further than that it "shall be 
fixed in accordance with the number and value of the 
articles so manufactured," and that it "shall be on an 
equitable basis according to the circumstances in each 
case," and that such^ royalty must be "not less than one- 
half of 1 per centum of the manufacturing cost" and "not 
more than 10 per centum of such cost." 

Somewhat similar provisions were contained in the Old- 
field Bill in 1912, except that jurisdiction over "compul- 
sory license" and the royalty therefor was invested in the 
courts, and not in "the Commissioner of Patents or such 
other governmental agency as the President may direct." 

Throughout the hearings in 1912 on the Oldfield Bill, 
inventors, manufacturers, publicists, scientific societies and 
business men's associations united in emphasizing how im- 
possible it would be for a court to determine a "reason- 
able" royalty, or an "equitable" royalty, for the "com- 
pulsory license" of any invention. 



^'Everybody realizes that is familar with the past history 
of the invention, for example, of the wireless telegraph 
or of the incandescent lamp, or any other important in- 
vention — the telephone — that had the terms of royalty 
been fixed, we will say, the first year* of life of that patent, 
it would almost certainly have been inequitable." (H. 
Ward Leonard, III, 22.) 

^^No court," declared a well known patent lawyer, ^^can 
reasonably be called upon to estimate the value of a 
thing whose value depends so much upon future develop- 
ments, not only future development of the particular in- 
vention involved, but also future possibilities with respect 
to the enlistment of capital, possible changes in laws 
which would affect the supply and demand — all these 
things, properly called ^'futurities," can hardly be con- 
sidered by any court called upon to estimate the value 
of an invention for the purpose of fixing the value of a 
license to make that invention." ( Samuel Owen Edmonds, 
XII, 11.) 

A firm of patent attorneys wrote to the House Patent 
Committee to the same effect : 

''Where a license is compelled when the invention is in 
a relatively imiDerfect stage no court would fix the royalty 
at a sum such as would be adequate for the same inven- 
tion when it has been placed upon a paying basis. When 
the telephone was devised nobody supposed that it would 
reach the stage it has now attained ori that the value of 
the patent was anything like the value it subsequently de- 
veloped. The same may be said of the typewriter. It 
was many years before the value of the typewriter was 
universally recognized, and it is certain that had a court 
in the early stages of the telephone or the typewriter been 
called upon to fix license fees for improvements in these de- 
vices, such fees would have been absurdly small, com- 
pared with later estimates." (E. S. & A. B. Lacey, XXVII, 
81.) 



6 

One of the leading authorities on patent law in this 
country explained just why the proposal must prove im- 
practicable : 

^^A royalty is an excellent way to get and give a return, 
provided things go exactly right and as the parties ex- 
pect * * *. It is a most difficult thing to determine 
upon any royalty that is fair to both, whether it is be- 
tween employer and employee or between an outsider 
and a manufacturing company * * *. A royalty con- 
tract is always subject to controversy. Suppose a man 
agrees to pay 3 per cent, of the selling price of a device 
embodying an invention. It may be a simple individual 
thing, like a razor. If that is so and it never 
changes, the matter is easy enough. But suppose it is 
a complicated structure in which one patent after another 
is added. The first thing you know you have 15 patents 
at 3 per cent, which would wreck that enterprise. 

"There is always sure to come up the question of 
whether the patent is infringed or not. You know that 
in 9 patent cases out of 10 the bulk of the argument is 
as to what the claim means ; what it covers. T^e patentee 
is perfectly sure to say, 'My claim covers this new thing 
the licensee makes/ The manufacturer says, 'No; it does 
not.' The result is that there is sure to be a controversy 
which may be carried to the courts, and it is for that 
reason, in so far as it exists, that a self-respecting manu- 
facturer on a large scale, Avho is making complicated 
things, may well say, 'I simply can not have a royalty 
contract with an inventor, because he and I are going 
to differ as to what is the scope of his claim. I will pay 
him a lump sum, even if it is a large sum, rather than 
to take my chances of his giving to those claims a con- 
struction that I do not believe is right and which may 
embarrass me as I build other machinery and devices. 
I will not take his patent; I will get along without it 
unless I can clean the whole matter up now.' That is 
the reason why I personally have advised clients for many 



years past never to take a royalty contract if they could 
help it, except as to patents on individual and specific 
devices, because there is always sure to be a controversy 
as to the construction of the patent and therefore of the 
scope of the agreement to pay royalty." (Frederick P. 
Fish, XXVI, 29-30.) 

How ^^oompulsory license'' would work, from the point 
of view of a i)ractical manufacturer and inventor, was 
explained by a well known manufacturer and inventor 
of printing machinery with an illustration from his own 
experience : 

^'Cottrell «& Babcock being ai new firm, building the 
same type of press, with nothing special to recommend 
it over the older manufacturers, who already had the 
business, were having a hard time to make any headway. 
At this time there were no patents on cylinder printing 
presses. Mr. Cottrell realized that in order to make a 
success he must build a press that would have some dis- 
tinctive features to make it better than those of its com- 
petitors * * *. Mr. Cottrell built a press with the Taylor 
air spring and experimented with it until he obviated 
every difficulty wtih the spring. He then had a press 
that could be run at a, one-third higher speed than the 
presses of his competitors, and was practically noiseless. 
He took out several patents on this improvement, and 
the security thus given him as the result of his genius 
and labor built up a great business which otherwise 
might have been a failure. * * * Every competitor of his 
saw its value, but it would have been impossible to get 
from any court an adequate fee. The Cottrell press with 
the new air spring sold at the same price as the presses 
of competitors — there was no overwhelming demand 
for his improved presses — so what evidence could 
he have produced in court justifying a liberal license 
fee? And yet, as after events proved, Mr. CottrelPs 
whole great business was built up by the exclusive use 



8 



for IT years of these early air-spring patente." (C. B. 
Cottrell & Sons Co., XVI, 6.) 

The Curtis Stearns turbine is a notable instance in 
point : 

''Take this Curtis turbine; the mere fact that you find 
them everywhere in this country, that |50,000,000 worth 
of them have been marketed, indicates how much they 
have had to do with the progress of the useful arts. The 
Parsons turbine is another type. At the end of four years, 
after the date of the Ctirtis patent, in 1900, the owners 
of the Parsons, for instance, could have gone to the 
owners of the Curtis patents, and said, 'We want a license,' 
and there would have been no answer to the request, be- 
cause the Curtis people had not been able to put out a 
single machine. That frequently happens. Often at the 
end of four years, or five or six or seven years, the man 
who owns the patent, who stakes his all upon it, has not 
been able to get anywhere, and yet he lives in hope. He 
says, 'If you let me alone I will get there before the end 
of the term of the patent.' 

"I have not the slightest doubt that in 1900 you could 
have put 40 experts on the stand who would have said: 
'The Curtis turbine is not worth a cent. The General Elec- 
tric Co. has spent millions on it and has not succeeded. 
Here is a man who wants a license. If he pays a cent a 
kilowatt, it will be just so much clear gain to the Curtis 
interests.' "What is the court going to say?" (Frederick 
P. Fish, XXVI, 26.) 

The street railway business, in its electrical develop- 
ment, illustrates the difficulty of any royalty compensa- 
tion for a "compulsory license" : 

"I myself have seen over and over again the most ex- 
treme errors in this matter of royalty. I remember very 
well when the Thomson-Houston Co. decided to go into 
the street railway business. It had to buy the Van de 
Poele patents. The Van de Poele Co. had been struggling 
along for years and had failed. As part of the transac- 



9 

tion there was to be paid for these Van de Poele patents 
a royalty of |50 a car. They also agreed to pay Van de 
Poele personally f 5 a ear, which ultimately made Mr. Van 
de Poele a rich man. At that time the Thomson-Houston 
Co. was selling the 15 horsepower motor equipments for 
|3j250 a car, and there was not so very much profit in it. 
It was not two years before it was selling a better equip- 
ment at |700 a car, and if that royalty of |50 had con- 
tinued it would have killed the business. It so happened 
that the Van de Poele Co. was discouraged at the situa- 
tion and soon after the contract took a certain sum in 
place of all future royalties, so that the Thomson-Houston 
Co. did not have the burden. This shows how even intel- 
ligent business men can fail to deal with such a question. 
No court could grapple with it at all." (Frederick P. 
Fish, XXVI, 26.) 

All these objections, of course, apply more strongly to 
the present Stanley Bill than they ever applied to the Old- 
field Bill, because the Oldfield Bill left to the courts the 
determination of the royalty for ^'compulsor^^ license," 
while the present Stanley Bill leaves this determination 
to ^^the Commissioner of Patents or such other govern- 
mental agency as the President may direct," and allows the 
patent owner no right of appeal to the courts to review 
any such determination. 

The chief engineer of a well known concern engaged 
in developing and manufacturing hoisting machinery, 
added another illustration: 

"The cableways produced by our company were sold 
outright at a very much less price. They were all pat- 
ented. The commercial pirate saw the machine and wanted 
to copy it. He could have obtained 99 hundredths of that 
machine without infringing on a patent. The difference 
between success and failure was a device known as a 
^fall carrier' or rope support. * * * Now we have five 
or six other patents on fall rope carriers, none of which 
was as good as the one presented, but any one of which 



10 

would do the work. Under the compulsory-license law, 
we would have lost all the advantage of 99 per cent, of 
the machine that had been produced at tremendous ex- 
pense if the commercial pirate could obtain a compulsory 
license for the fall rope carriers. The clause proposed 
leaves it to a district judge to fix the royalty. What would 
a district judge say when a man comes before him and 
says, ^I want to build that carrier?' The judge says, 'How 
much does the carrier cost?' He replies, ^$50.' 'Well/ the 
judge says, 'you pay a royalty of 10 per cent. ; that is $5.' 
]S^ow, we lost the sale of cableways, at |12,000 each, on 
which we made, and our compulsory licensee gets all the 
advantage for perhaps |50 or |100 royalty." (Spencer Mil- 
ler, XXIV, 15-16.) 

The burden of litigation entailed upon the patent owner 
by the procedure for granting "compulsory licenses" was 
emphasized by a number of witnesses: 

"The provision for compelling a license," said the vice- 
president of the Patent Law Association of Washington, 
"attaches to every patent the liability of defending such a 
proceeding, and imposes upon the patentee, or his assignee, 
the burden of defending such a proceeding. No court 
would undertake to prescribe the terms and conditions of 
a license, Avithout a full showino- of the facts bv both 
sides as a basis for a judgment as to what terms and con- 
ditions would be fair. 

"I doubt if it would be possible, even after the most 
exhaustive investigation or trial of such a question, and 
a submission to the tribunal of all available facts, to make 
an arbitrary decision which would ultimately prove fair 
and equitable both to the licensor and licensee. On the 
one hand, further development of the invention might 
demonstrate the utter inadequacy of the reward prescribed 
by the court for its use. On the^ other hand, developments 
might show that the disclosure in the patent constituted 
but the germ of the real discovery or invention, in; itself 
impracticable and of no value, but when developed and 



11 

perfected by the scientific knowledge and ingenuity of men 
trained in the practical development of the arts might be- 
come of great value. The value, however, would reside 
largely] in the new discoveries, or improvements, without 
which the old invention would have been valueless. In 
such a case the royalty prescribed under the original 
patent might be grossly excessive, or the later inventors 
be deprived of their just proportion of the reward; else 
the cost of the invention would be increased beyond the 
value of its use by the successive royalties, and failure re- 
sult from want of a market. 

^'Whatever conclusion the court might reach, and 
whether fair or unfair, could only be reached after pro- 
ceedings quite as exhaustive and expensive as ordinary 
suits for infringement, and the possibility of such a bur- 
den of expense attached, to a patent from the moment it 
is granted would place upon it such a handicap as to 
practically take it out of consideration so far as interest- 
ing capital for its exploitation is concerned." (E. W. 
Bradford, XXVII, 48, 49.) 

"It will always be an expensive matter," wrote the 
Merchants' Association of New York, "for the average 
patentee to produce evidence in court in support of his 
side of the case in such a court proceeding; and while this 
proceeding is instituted for the purpose of determining 
what compensation the patentee is to receive for the li- 
cense, such compensation can in most cases not stand in 
fair relation to the value of the invention. It is obvious 
that while the patent constitutes a true monopoly, it has 
a much greater value than when its monopoly is violently 
destroyed by permitting one or more others, and poten- 
tially everybody, to share in the same. The holder of the 
original patent in order to protect his rights would have 
to disclose many business secrets, and such suits would 
often be brought merely for the purpose of forcing such 
a disclosure and not for the bona fide purpose' of obtain- 
ing such a license." (S. Christy Mead, XIX, 4.) 



12 

Tlie resulting advantage from this condition of affairs 
must necessarily favor the large corporation as against 
the ordinary patent owner. The predicament which the 
patent owner would he in was well described by one manu- 
facturer : 

"He must retain a patent counsel and they are an 
expensive class of counsel. He must fight a long-drawn 
out and costly suit, involving many pages of typewritten 
testimony, printed briefs, printed records, and numerous 
other items of cost incident to even ordinary litigation, 
and in a case of this kind, it will be extraordinary litiga- 
tion. He may be too poor and friendless to do these things, 
and the case goes against him by default. He is ruined." 
(M. Dorian, VIII, 11.) 

"How will the court determine what is adequate com- 
pensation?" asked a patent attorney, and then proceeded 
to answer his own question. "By testimony submitted be- 
fore it. Who will furnish the bulk of such testimony? 
The paid experts of the corporation suing for compulsory 
licenses. These experts will come primed with "cost data" 
to establish high manufacturing and selling costs. They 
will be in a position of great vantage, and the court will 
not be able to determine, in most cases, whether the testi- 
mony given as to manufacturing costs and as to selling 
costs is correct or misleading." (R. S. & A. B. Lacey, 
XXVII, 96.) 

"The effect of such laws, if adopted," said the president 
of the Patent Law Association of Washington, "will be to 
benefit the very combinations at which the bills are aimed. 
They may easily follow the onerous provisions and may 
harass every individual under the aegis of the law. 

"The inventor will then find it still harder to secure 
capital. As it is now the law enables him to get his patent 
in advance, even of the demand. He seldom can interest 
capital until he has his patent, but under such provisions 
the most friendly capital will not take the risk of having 
to meet the burdensome and harassing litigation liable to 



13 

be thus imposed. The litigation now required to maintain 
a patent is certainly sufficient without imposing this most 
vexatious of all forms of litigation." (Walter F. Rogers, 
XXVII, 12.) 

'How, after having fixed the^ amount of royalty for the 
first applicant,! the amount of royalty for the second, 
third and fourth applicants could be determined, is hard 
to conceive: 

"Assuming that the court itself grants an adequate li- 
cense fee or royalty in the case of the first licensee," in- 
quired one mtness, "is it probable that with each suc- 
cessive licensee the value of the license would be reduced? 
A court would certainly not hold that a nonexclusive li- 
cense was as valuable as an exclusive license. The court 
would have to take into consideration that licenses of the 
invention would spring up on all sides, and that a manu- 
facturer would be utterly incapable of knovdng whether 
he would control the trade or a particular section. There 
would be no certainty in the business of the manufacturer, 
and he would feel that after he had spent a large amount 
of money in advertising and in creating a demand for an 
article in a certain section, the trade of that section 
might be taken very largely or entirely away from him 
because of the appearance of competing manufacturers." 
(R.*S. & A. B. Lacey, XXVII, 79.) 

Let it again be noted that while the Oldfield Bill left 
it to the courts to determine the royalty for "compulsory 
license," the present Stanley Bill leaves this determination 
to "the Commissioner of Patents or such other govern- 
mental agency as the President may direct," and allows 
the patent owner no right of appeal to the courts to re- 
view any such determination. 

"To render the provision effective," explained a patent 
lawyer discussing the Oldfield Bill in 1912, "the section, 
endows the Federal District courts with powers which 
practically constitute the 72 Federal District Courts into 
courts of patent commerce, so that the bill, as a law, 



14 

would create tMs number of patent commerce courts in 
the United States. As now worked, the section is not 
limited to any type, class, or group of inventions. It is 
sweeping, all inclusive. It embraces collar buttons and 
steamships, tooth-brushes and transportation systems, toi- 
let articles and safety-appliance systems, telegraph sys- 
tems and tools, articles and devices limited in use to 
isolated industries and articles that go on the tables of 
the people, garments and foodstuffs, patent roads and 
buildings, inventions which have a restricted use in special 
fields and those which affect the great mass. In short, so 
sweeping are the powers created by the proposed law as 
to give the District Federal Courts jurisdiction over all 
fields of commerce." (R. S. & A. B. Lacey, XXVII, 94.) 

If the Federal Courts, in 1912, were unfitted to exercise 
such uncontrolled jurisdiction, how can it be urged, in 
1922, thatj such limitless powers should be vested in "the 
Commissioner of Patents or such other governmental 
agency as the President may direct,'' with no right in the 
patent owner to appeal to the courts to revieAv any abuse 
of such power? 



15 
II. 
HOW WILL ^'COMPULSORY LICENSE" AFFECT 

AN i:nve:nitoRj endeavorino to dispose 

OF HIS INVENTION? 

The long time that almost invariably is required to de- 
velop and introduce an invention after it has been patented 
is the inevitable and all-important condition that limits 
the value of the invention. 

"Seventeen years," said one of Edison's former pupils 
speaking before the House Patent Committee in 1912, ''is 
a very short time and conveys a very false impression. No 
patent of merit has ever been brought to marketable con- 
ditions as an average in less than about ten years. The 
effective life of the patent is about seven years, not more. 
No patent that comes out of the Patent Office of merit is 
effective immediately." (H. Ward Leonard, IV, 24.) 

"As a rule," said the chairman of the professional com- 
mittee of the Inventors' Guild, "it takes seven or eight 
and sometimes ten and twelve or even fifteen years to de- 
velop an absolutely new invention. When I say 'absolutely 
new invention,' I mean an invention that relates to some 
patent that has not been developed before to any extent." 
(F. L. Wadsworth, XXI, 14) 

"If a man conceive an invention and gets his patent 
upon it," said the manager of a well-known concern, "his 
troubles, as I said before, have only just begun. Suppose 
he has got something of value. Usually from three to five 
years are occupied before he actually gets it on the mar- 
ket, no matter how valuable his invention is, and this is 
a situation that, so far as I have been able to ascertain, 
does not seem to have been brought before this committee. 
Apparently, the inventor is given hisi seventeen years' 
monoply, but out of that time, before he actually gets a 
market for his product or for his invention, assuming that 
he himself is capable of manufacturing it, he loses from 



16 

three to five years in getting it introduced.'' (Edwin Fair- 
fax Naulty, III, 7.) 

One of the; legal udvisers of the General Electric Com- 
pany illustrated this point with the story of the Curtis 
steam turbine : 

•'The patent for a steam^. turbine/' he said, ''was taken 
out in 1896 by a man named Curtis. He came to the Gen- 
eral Electric Co. ; he came to me. I thought it was a 
very remarkable idea, and the result was that the General 
Electric Co. took hold of it under a contract by which 
they were not obliged to pay him a cent for tAvo years. 
They knew they could not get the invention into commer- 
cial shape in less than that time. At tJie end of two 
years the contract was extended. The result finally was 
that seven or eight years after the date of that patent, 
when the turbine was in commercial shape, the General 
Electric Co. had spent millions of dollars developing it 
before they began getting any returns. Since that time 
machines built under that patent have been sold to the 
extent of {50,000,000 in this country, and it is a wonder- 
ful success, which has promoted our useful arts to a most 
extraordinary degree. Today they are designing a 45,000 
horse-power machine of that type. The inventor himself 
made a fortune from the transaction. That is a typical 
case of those inventions which promote the useful arts 
to the greatest degree. 

''What Avould have happened if there had been any such 
thing as a compulsory license in the law? The patentee 
would have struggled against hope. The General Electric 
Co. would have said : 'This is the sort of thing that will 
take five or six or seven years to complete, and then we 
may fail, and at the end of four or five years if it is not 
on the market somebody may get a compulsory license.' 
^^0 one would touch the enterprise. If you have any sort 
of compulsory license in^ the law, the mere fact that you 
say to the inventor, *You shall no longer have those seven- 
teen years in which you can absolutely control the in von 



17 

tion/ will mean that the inventor's situation will be hope- 
less as far as the large inventions and most small ones 
are concerned. 

"Under modern conditions there is rarely an instance 
where the inventor can get into the market unless there is 
capital behind him. This big country has to be covered 
by organization, and that requires capital. If, with the 
chances of failure, with the chances of being superseded, 
and of not being able to get a market that exists at the 
present time, and with all other chances, it is provided 
by law that after a comparatively short time, or after 
any time, there can be a compulsory license on any terms, 
the capitalist will say, 'I won't touch it,' and the in- 
ventor will have nobody to supply the money that he needs 
for development, because no one will buy the patent of 
him and no one will cooperate with him in developing an 
industry under it. 

"The inventor needs not merely money; he needs busi- 
ness brains; he needs business organization; he needs in- 
telligence in designing machinery and a number of other 
things, all of which he is able to get now because of the 
faith there is in the capitalist, the manufacturer and the 
inventor that during these seventeen years something will 
happen b}^ which his invention will turn out all right." 
(Frederick P. Fish, XXYI, 23, 24.) 

The expense involved in the experimental process of de- 
veloping and introducing an invention after it has been 
patented is always prolonged and uncertain, and generally 
greater in proportion as the invention is more important. 

"I know^," said the president of the American Institute 
of Chemical Engineers, "many patents which cannot be 
Avorked except after the inventor has found capitalists to 
furnish him, say, 1500,000 or |1,000,000. I have been 
personally identified with such enterprises where they 
could only begin to work an invention after investing to 
the extent of |1,200,000 for plans only. They did nor 
oven know theu whether it was £>x)ino- to work. It was 



18 

purely a gamble up to that point.'' (Dr. L. H. Baekeland, 
IV, 42.) 

"A man may, for instance," said a trade editor, "secure 
a patent on a devise that is very useful — exceedingly 
useful — ^yet, owing to the machinery that exists, the 
dies, etc., for constructing that device, it may be impos- 
sible for him to put it on the market so as to maintain its 
position on the market. He may then be compelled, as I 
have been compelled in several cases, to devote whole 
years to the preparation and devising of machinery to 
manufacture a quantity at such a figure/ as to render its 
general sale possible." (Joseph J. O'Brien, VT, 22.) 

''I am the inventor of a system of electrical locomo- 
tives which was applied in Switzerland," said a leading in- 
dependent, inventor, "and I happen to know that the ap- 
plication of it there, under license of my patent, to put 
the first locomotive in operation, required an expenditure 
of half a million dollars to test the thing out." (H. Ward 
Leonard, III, 18.) 

How these difficulties have hindered the development 
and introduction of some of the most successful inven- 
tions appeared from specific instances described in 1912 
before the House Patent Committee: 

"In my particular case," said a successful inventor, "I 
have been quite fortunate, and some one has stepped in 
and paid a salary nearly all these years — that is, I 
have received between |35,00Q and $40,000 in salary, 
largely along inventions which the public has not yet paid 
for, simply because it has taken so long to bring them on 
the market, and the history of my ^ase is the same which 
is repeated with the McMillan typesetter and the Paige 
typesetter. The Mergenthaler had almost as long a history 
before it managed to get the attention of Mr. Philip Dodge, 
who put the Mergenthaler typesetting machine on a paying 
basis after an enormous effort." (Benjamin M. Des Jar- 
dins, XXI, 6.) 



19 

"I asked Mr. IngersoU of the Ingersoll Watch Com- 
pany/' said one of the witnesses before the Committee, 
"how long it took after his first patent was granted to get 
a watch on the market, and he said from five to six years. 
I asked what it cost to do it, and he said about |51,000 
before they were able to sell their first watch/' (William 
W. Dodge, XXYII, 35.) 

"This little Blickensderfer typewriter," continued the 
same witness, "with which the public is familiar, I am 
credibly informed, involved an outlay of over |400,000 be- 
fore the machine was ready for the market, and consumed 
years of the term of the first patent before it was placed 
upon the market." (William W. Dodge, XXVII, 35.) 

Already the risk, which the patent owner assumes, that 
some rival may parallel or improve upon his invention, 
after he has patented it or while he is developing and in- 
troducing it, is very serious. 

"It has been my experience in the electrical industry,'' 
said the president of an independent electrical company, 
"that the life of improvements is very limited. As a 
matter of fact, I have had improvements, that I have made 
myself, absolutely nullified and eliminated by further im- 
provements, made by myself or made by others before the 
patent on the initial improvement is even issued from the 
Patent Office. In other words, an improvement may not 
have lasted more than a year or two years." (Arthur 0. 
Eastwood, XV, 9.) 

"I have in mind one inventor, who is very close to me," 
said a Washington patent attorney, "who has for the last 
eight years been working at nothing else but a very val- 
uable system for use on railroads, and it is effective. The 
invention has been perfected, and it has even been put 
into operation. Yet, it took him eight years to finally 
get the improvements necessary to make his original in- 
vention a success, and I dare say that even now it is open 
to some other radical improvements which will make it 
the more effective, and if he gets into the market, as he 



20 

expects to do, lie will be in competition with, tlie big in- 
terests ; and tbey have their corps of experts and inventors 
whom thej will immediately proceed to have them either 
parallel his device or to effectively improve if (Hugh M. 
Sterling, VI, 4.) 

All these difficulties directly affect the original inventor 
when, he seeks to dispose of his original invention. 

"In lorder that the inventor should receive* his fair 
share," said Mr. Louis D. Brandeis now Associate Justice 
of the Supreme Court of the United States, "there must be 
an attractive proposition for the capitalist." (Louis D. 
Brandeis, XVIII, 10.) 

The same principle was laid down by an advertising 
expert : 

"In order for that inventor to get his price from the 
rich man who buys the invention, you have got to make 
it worth while to that rich man so that he can get his 
money back. It is most important to remember that. 
Takd Grray, and his steel-beam mill, and take the case of 
Dow, the real original inventor lof the steam turbine. 
What happened? He could not interest capital; they would 
not buy his invention. Now, why would not they buy his 
invention? The same situation holds true in hundreds of 
other* cases. The reason they will not buy is because 
they do not see how they are going to come out commer- 
cially with the article." (J. George Frederick, IX, 23.) 



21 

III. 

HOW WILL ^'COMPULSORY LICENSE" AFFECT A 
CONCERN ENDEAVORINa TO "SUPPRESS" AN 
INVENTION? 

Tlie protection of the patent laws, as has been shown, 
is the inducement that persuades inventors to patent their 
inventions, thereby making them known to everybody, 
with the result that after the lapse of seventeen years, 
when the patent, expires, anybody may freely use the in- 
vention. Already the protection afforded by the existing 
patent laws has not proved sufficient to induce some in- 
dependent inventors to disclose their inventions. 

"I have several things," said a leading member of the 
Inventors' Guild addressing the House Patent Committee 
in 1912, ''which I found it would be practically impossible 
for me to get patents on which could be protected. I am 
manufacturing them and have been for years. They are 
in the nature of enamel processes, and the ingredients of 
those enamels and the formulae and the method of treating 
and handling are matters which have never been public, 
and to a large degree they tend to protect me. If the patent 
laws were such as they should be, if I really could get 
the protection that it was the intention of our patent law 
that I should get I would have published aU those things 
and gotten the patents, but I know' from experience that 
the publication of those things, the full publication of 
them, would merely mean that I would be wiped out com- 
pletely by the competition." (H. Ward Leonard, IV, 23, 
24.) 

"Compulsory license" would aggravate this situation. 
As a leader of the patent bar explained : 

"Any quantity of inventions that are made will, if there 
is a compulsory license provision in the law, be suppressed 
because they will not be patented at all. The inventor 
will say, 'I am not going to run the risk of having to 



22 

give compulsory licenses. I will take tKe chance of some- 
body else rediscovering this secondary idea of mine.' And 
that would hurt the patent system beyond expression.'' 
(Frederick P. Fish, XXVI, 26.) 

How a strong concern, desiring to suppress an inven- 
tion belonging to al weak rival, could accomplish its pur- 
pose by the procedure for ^'compulsory license" was de- 
scribed by the counsel for the Singer Sewing Machine 
Company : 

^'I tell you that the compulsory license clause will en- 
able every big fellow to drive out the little fellows, and 
I will tell you how they can do it. 

^'Take, for example, the Singer Company — if you 
can give me this compulsory license clause, as the counsel 
of the Singer Company I can clean up every other com- 
pany in the United States within a few years Avho are 
manufacturing anything in the special sewing machine 
line. I will tell, you how I could do it. 

^'I will go after, for instance, the Union Special Com- 
pany. They are opponents of the Singer Company. They 
are the most enterprising people I ever knew, and the 
only thing that keeps them in the business against the 
Singer Company is their enterprise. They have these ex- 
perimenting rooms such as I have described a moment 
ago — I think one in Chicago and another in New 
York-Sunder men Avho are perfect princes of in- 
ventors, and they have a great many patents; and the 
Singer Company does not dare touch those patents. The 
result is that they are keeping right in the business, al- 
though they are a small concern. I could, in the experi- 
menting room of the Singer Company, make an improve- 
ment on some one of; those patents that I want to use, and 
then I could, in behalf of the Singer Company, ask for 
licenses under this patent of the Union SpeciaT Company." 
* * * ^'Suppose they each had a license; how long would 
the Union Special Company stand as against the Singer 
Company when they have each a license under the same 



23 

patent? The Singer Company has perhaps 6,000 agents 
all over the country. These are not only ready to sell 
their machines, but they are on the spot to keep their 
machines in order, so that when a user of a machine wishes 
it fixed or* finds any difficulty with it, he can go right to 
an agent near at hand and get that thing attended to. The 
Union Si)ecial Company has its head offices in, we will 
say, Chicago, and a branch office in a few cities of the 
United States. Put those people on equal footing, where 
each one has a license under the other's patent; how then 
can the Union Special Company stand against the Singer 
Company? 

''Besides that, in the matter of manufacture, look at the 
advantage that the Singer Company would have — 
and I am speaking against my own client now. They 
have automatic machinery that will turn out these ma- 
chines in duplicate cheaper than any other concern can 
do it, probably. 

"I mentioned the Union Special Company but I might 
mention a half dozen others. I could mention the Reede 
Company, for instance. You take any one of the small 
special sewing-machine concerns of the United States, and 
give me that compulsory license clause, and I will clean 
them up inside of five years." (Livingston Gifford, XIV, 
14b, 14c.) 

The hardship that "compulsory license" would entail 
upon a w^eak manufacturer struggling to develop and ex- 
ploit an invention was gra dically described in 1912 before 
the House Patent Committee: 

''He may have impoverished himself and his family in 
bringing his invention to the point where it could be cov- 
ered by an application; he may find it necessary to im- 
prove and protect it, and may, in fact, have reached the 
point where he has succeeded in doing this, and is ready 
to begin the actual manufacture, but is at the end of his 
resources for the moment. 



24 

'^He has put every dollar lie liad in the inaugurating 
of that invention, and he has got it now where he has 
something he can go to a capitalist with, and say, ^Here, 
I want money to advance it/ 

^'Just at that psychological moment comes this sum- 
mons to appear and show cause why he should not be com- 
pelled to grant a license. It may be, and in many cases 
will be, a fact that the^ summons has been craftily timed 
for just the moment; that there will be a number of them 
either as the result of a well-laid conspiracy or pure acci- 
dent, because if he has got a good invention, because if 
has got a good thing there will be numbers of people 
watching that very moment when the four years have ex- 
pired to bring in their summons and claim the license un- 
der it. Just when the poor inventor - sees an end to all 
Ms struggles and sacrifices and success within reach, he 
is smothered, annihilated, by a storm which carries him 
and all belonging to him to destruction." (M. Dorian, 
VIII, lib.) 

^'You place this power in the hands of big corporations," 
said a representative of the Patent Law Association of 
Washington," and they do not want anything better. But 
the little manufacturer, with his patent, the only thing 
that enables him to exist in the manufacturing line to- 
day, would be taken away." (William W. Dodge, XVII, 
41.) 

Some of the witnesses before the House Patent Com- 
mittee in 1912 did not mince, words : 

''I fear myself," said one, '^that if the bill as it no"v\- 
stands passes we shall have a wholesale system of cun- 
ning piracy on the part of the big corporations and which 
will lead to the loss of what little independence the fore- 
most inventors now have, and which the younger inven- 
tors are striving to secure, without any sacrifice to their 
principles of honor or manhood." (Joseph J. O'Brien, 
VI, 21, 22.) 



25 

IV. 

HOW WILL "COMPULSORY LICENSE" AFFECT A 
PATENT-OWNER ENDEAVORINO TO DEVELOP 
AN INVENTION? 

The mere failure of a patent owner to raise tlie capital 
whereby his patent may be "worked or put in operation 
so as to result in actual production in the United States 
of the article disclosed in Buch patent, in reasonable 
quantities, within a reasonable time, from the date of its 
issue," w^hatever "a reasonable time" may be within the 
meaning of the present Stanley Bill, renders the patent 
owner, without further act on his part, subject to "com- 
pulsory license." 

The patent owner may thus become liable to "compul- 
sory license" because of conditions entirely beyond his 
control. 

"The effect of the compulsory license clause, in many 
cases at least," said a w^ell know patent lawyer speaking 
before the House Patent Committee in 1912, "would be to 
penalize the patents for the public's lack of appreciation 
of the merit of his invention. That also seems perfectly 
clear. You may go back in the historj' of the develop- 
ment of inventions practically to the beginning of our 
patent system and find thousands and thousands of cases 
where it was just because of this lack of appreciation by 
the public that the patentee's invention, however meritori- 
ous, did not see its way into public use * * * The effect 
of the compulsory license clause, would be to penalize 
the poor patentee because of his poverty." (Samuel Owen 
Edmonds, XII, 8.) 

Even under the existing patent laws, the difficulties 
I)resented in the development and introduction of new in- 
ventions tax the persistence and resources of the ablest 
manufacturers. 

"In one instance," said the chief engineer of a well 



26 

known concern, ^'I labored for four years, and the com- 
pany went into the treasury for at least |50,000 in order 
that we might solve the problem of taking cypress logs 
out of the swamps of Louisiana cheaply and regularly. 
When I began, no one could obtain a constant supply of 
cypress logs for even |8 per thousand. When we were 
through, a constant supply of cypress logs from the swamps 
could be had for |3.85 per thousand. 

^'Nobody troubled us in the experimental period. No- 
body troubled us when our cash account was wrong. No- 
body cared what I was doing, so long as we were only 
selling a few machines. After four years of labor, financial 
loss, and personal discomfort — for I assure you, I have 
slept in swamps wdth lizards about my bed and pois- 
onous snakes under my camp, taking chances of catching 
malaria in order that I might know everything about the 
requirements — I had just about reached the point where 
the machine was ready to be introduced on a large 
scale when a rival entered the swamps and absolutely 
took measurements and made drawings of everything we 
had produced. 'He reproduced the machine for a thousand 
dollars less than we were asking, and our business was 
gone. We were paying the inventor |500 for a machine 
w^e were selling for |5,000. The rival did not have to pay 
that |500. His program was to build the machine and 
let us or the inventor sue. There was not enough in the 
business; there was not field enough to warrant an ex- 
tended suit a long distance from our works. We had in- 
vested our money in producing a machine that would save 
millions of dollars to the people of Louisiana; and I say 
that advisedly, for many men whom we could hardly 
trust for a |5,000 machine are worth |5,000,000 today. 
They made it out of cypress. They were clever enough 
when they saw that the problem had been solved to buy 
up cypress swamps at from |1 to |2 per acre that are 
today selling for |75 per acre." (Spencer Miller, XXIV, 
8-9.) 



21 

A veteran printing-macliiiiery manufacturer added an 
illustration from the Mstory of his own business : 

^^The Mstorv^ of our Cottrell rotary multicolor press is 
a vivid example. 

''Experimenting began on this machine in 1900 — 12 
years ago — and continued 10 years without cessation be- 
fore the first perfected machine was in practical daily 
use in a purchaser's plant. 

"We had long built rotary presses printing in four 
colors, but only for special work of rough character. 
* * * In 1900 we began tQ consider means for adapting 
this rough-color printing press for fine work. As fine 
color printing required 'make-ready' and as 'make-ready' 
of several colors was not possible on the one impression 
cylinder of our press, it was absolutely necessary to find 
means to put the 'make-ready' in the plates themselves. 
This meant deep investigation into the processes of en- 
graving and electrotyping along entirely new lines. 

"The problem was presented to the most skillful press- 
man and engraver we knew, and he entered our employ 
to work it out. It is not necessary to enter into technical 
details, except to say that the basic problem was means to 
so prepare the printing plates that no make-ready (so- 
called in the trade) would be necessary on the press. This 
problem of a self-printing plate was solved successfully 
on 1901, and immediate iapplication for a patent was 
made. This process was a mechanical success, and the 
next step was obviously to devise means to utilize it com- 
mercially. A press was built somewhat on the principles 
of our old color presses, and for three years the patient, 
expensive, heart-breaking experimenting went on. To 
carry out the details of the new process, a special hy- 
draulic press had to be built, and other special machinery, 
each one as developments of the experiments compelled. 
Then it was found that the press was not strong enough, 
so an entirely new one had to be designed and built. 
When the process of treating the plates was satisfactory, 



28 

and tlie new press was running properly, then it was 
found that the idea of printing one color upon anotheir, 
while still wet, was impracticable with any printing inks 
then on the market. An ink chemist was employed who 
spent oyer a year in the unsuccessful effort to produce 
inks of the desired character. Then the problem was 
placed in the hands of a practical printing-ink maker, 
who finally succeeded after months of experimental work. 

"Then, having the pfrocess, the press, and the inks, the 
result was still uncertain, and not entirely satisfactory. 
It was finally discovered that the arrangement of the 
printing cylinders was at fault. They were arranged ver- 
tically, so that the lowest one was near the floor and the 
upper one neajr the ceiling. This subjected them to dif- 
ferent degrees of temperature, which affected the working 
of the inks. Another press was therefore designed and 
built with horizontal arrangement of cylinders, bringing 
them all into the same zone of temperature, and then the 
results were satisfactory in all respects." * * * 

^The usual method of printing fine color work is to 
print one color and let it dry, then print a second color 
and let it dry, and so proceed until all the colors are in 
place. The sheets of paper have to go through the press, 
once for each color. With the new rotary multicolor press, 
on the contrary, the sheets go through the press but once. 
White paper is fed in' at one end of the press and comes 
out at the other with all colors in proper place, completing 
the finished picture at one operation with a perfection 
heretofore unknown* and a speed and economy heretofore 
undreamed of. The superb colored covers and inside pages 
of the Ladies' Home Journal are samples of the work of 
the press. 

"Meanwhile attempts were made to interest publishers 
and printers in the press and process, but with little suc- 
cess. * * * Finally in desperation we offered to install 
the press at our own expense in a large publishing con- 
cern; and furnish our experience and assistance in trying 



29 

it out. Even then tliej ran that mackine nine months 
every day before they were ready to give us their first 
order. 

"No time was lost, and yet for ten years we poured 
money, money, money into this idea before we could sell 
the first rotary multicolor press." * * * As a result 
of our patent protection the public is getting at nominal 
cost a character of color printing which a few years ago 
could only be secured, if at all, in art stores at very high 
prices. Without this protection the risk would have been 
too great to justify the course we took. Any license to 
a competing manufacturer, or to anybody else, at any 
price would be fatal to our enterprise.'' (Edgar H. Cot- 
trell, XVI, 8-9.) 

Under the present Stanley Bill, pioneer inventions of 
the utmost value, which might be delayed in development 
because of the backwardness of the existing art, would be- 
come subject to ^'compulsory license." 

"Suppose," said a leading electrical inventor, addressing* 
the House Patent Committee in 1912, "that I have an 
American patent; I would be obliged to manufacture it 
after four years or be subject to the compulsory license 
feature. We will suppose it is an electric locomotive, a 
large affair, that I have not the capital to handle, and we 
will suppose, as would be quite evident, that I take that 
away to one of these large corporations? I say, 'Here is 
a patent which has some good claims in it.' They will 
say, 'We do not want that at present. It is ahead of time, 
and if we do buy it, it would be merely with the idea of 
guarding against the future. It is of little value anyhow, 
because it will not be reached in four years ; that is quite 
clear, and unless we manufacture it in four years, which 
we probably will not, the result will be that we will be 
forced by this act to grant a license to some one else, 
and therefore we do not have any monopoly." (H. Ward 
Leonard, IV, 19). 

How "compulsory license" would have affected the de 



30 

velopment of tlie rotary press was explained to the House 
Patent Oommittee in 1912, by one of the leaders in the 
industry: 

^Trior to 1890/' he stated, "rotary presses printing 
both sides of the sheet from a roll of paper were in general 
lise for newspapers. Occasional attempts had been made 
to adapt such presses to the printing of illustrated periodi- 
cals, but without success, because the hard surface of 
such papers did not promptly absorb the ink ; this wet ink 
would get off on the impression surface and smear or smut 
the succeeding sheets. Mr. Cottrell worked out and pat- 
ented an ^automatic' shifting tympan which he believed 
would meet this difficulty, but it was in advance of the 
times, and for some years he could find no publisher 
who wanted to buy such a press. 

"However, the time finally came when the Youth's Com- 
panion, a weekly illustrated paper, of Boston, was forced 
to seek new and faster printing methods. * * * They 
finally agreed to buy such a press if one should be built 
which would print their paper satisfactorily. This was 
pioneer work, creating entirely new mechanism, and had 
to be built entirely at Mr. Cottrell's risk. After months 
of work, at great expense, a press was designed and built 
adapting the rotary perfecting' principle to the produc- 
tion of high-class printing. AVhen it was tested at the 
works it was found that the patented offset mechanism 
was a failure. 

"A long and tedious series of experiments was under- 
taken, finally producing an entirely new type of shifting 
tympan on the rotary press which was patented, which 
would turn out printing equal in quality to that previ- 
ously done on flat-bed presses, delivering sheets printed 
on both sides at the rate of 4,500 per hour; whereas, each 
flat-bed press printed but one side of the sheet at a speed 
of only 1,200 per hour. That is, one rotary press with 
a pressman and a helper produced as much as eight flat- 
bed presses with four pressman and eight feeders. 



81 

"It would seem that immediate sales of large numbers 
of these presses would follow such an invention with sub- 
stantial profits. As a matter of fact, it was a year and 
a half before a second one was sold, and that was bought 
by the same firm, the Youth's Companion. It was found 
that large sums had been spent in developing the machine, 
for which the demand was very limited, because there were 
few illustrated publications with circulations sufiicient 
to require such a machine. 

"When the first four years of these patents had expired 
if a demand had been made for a compulsory license, as 
proposed in the new patent laws, what showing could we 
have made to the court? Only a few presses built and 
a large amount of money spent with slight expectations of 
every getting it back. However, as time passed, a few 
far-seeing men of ambition in the publishing business were 
willing to ^take a chance' on the success of high-grade 
periodicals at a low price, made possible by the economy 
of manufacture produced by Mr. Cottrell's new rotary per- 
fecting presses. The amazing growth of nationwide cir- 
culations, due to low subscription prices, is a matter of 
comparatively recent history." (Edgar H. Cottrell, XVI, 

7.) 

A very recent case in point was described to the House 
Patent Committee in 1912 by a firm of Washington pat- 
ent attorneys:, 

"A client of ours," they wrote, "devised a certain en- 
tirely new form of furnace. We are informed that only 
one patent has been granted upon this form of furnace 
and that to the inventor in question. The patent was 
issued some six years ago. At the time it was issued it 
was in advance of the art. It was based upon a very little 
known chemical principle which had never been applied 
to furnaces, and the invention was regarded as imprac- 
tical. The invention was such that in order to give a thor- 
ough trial it would have been necessary to expend at least 
|25,000 and probably more. The inventor was practically 



32 

penniless, and often found it difficult to provide for even 
the simplest needs of his family. Under the circumstances, 
he himself could not possibly work the invention, nor could 
he interest any company^ of sufficient size to even experi- 
ment with it. They did not understand it ; they regarded 
it as impractical and purely theoretical. 

''Last year a certain European scientist of reputation 
conducted a series of experiments on the combustion of 
gases. In the course of these experiments he evolved very 
much the same ideas as did our client, andf he published 
the results of these experiments together Avith his theories 
on the subject. He was a man of such standing that his 
word carried weight, and as a consequence what was before 
regarded as entirely impractical is today regarded as at 
least feasible from an operative standpoint; so that now, 
six years after the grant of his patent, the inventor is 
just in a position to get his invention adopted and placed 
upon the market. 

^'If this law is to go into effect, an inventor under cir- 
cumstances the) same as above related would lose the right 
to a monopoly of his invention, the right to make ade- 
quate terms upon which it could be used or manufactured ; 
and through no fault of his own, but simply because the 
average knowledge of the world lagged behind his inspira- 
tion. He could no longer obtain the price for hisi inven- 
tion, which he might if there was no compulsory license 
law, because the first company to whom he could present 
the invention would insist that the value of the patent 
was very much reduced, by reason of the fact that other 
companies could come into the market by securing a li- 
cense under the patent. It might be that no other com- 
panies would desire to secure a license, or that few com- 
panies would; but neverthelss this excuse would be used 
by the first company. The inventor would get a com- 
paratively inadequate return, and he might never be ade- 
quately compensated." (K. S. & A. B. Lacey, XXVIL 
78, 79.) 



33 

Independent inventors and manufacturers all agree that 
an invention can be adequately protected only by patents 
covering not merely the form of the invention that has 
proved most satisfactorily^ but also all other forms that 
can accomplish the same purpose, even in a less satis- 
factory fashion. 

^'Suppose/' said an officer of the Inventors' Gruild, "one 
company has developed a business de novo^ in the produc- 
tion of a given article produced by a given process, on 
which it holds both article and process patents and ma- 
chine patents for producing the article. Supposing it is 
satisfying all reasonable demands of the public as to that 
article; it is giving the public all that the public will 
buy. Then, under those circumstances, I say it is only 
right and just that the company — ^that particular com- 
pany — which has developed this business de novo^ build- 
ing up an entirely new art, should have the right to pro- 
tect itself by buying other patents for producing that same 
article — not different articles, but that same article — by 
different processes and by different machines. * * * 

"You are sim23ly giAdng to the original developer — that 
is our assumption, that this manufacturer is the original 
developer of a given business — the moral right to protect 
himself for the development of that business, and for se- 
curing the reAvards which he is certainly entitled to by 
reason of that development. * * * 

"The development of a patented process or patent ma- 
chines, or the introduction of a patented article is a matter 
that involves enormous expense. You have got to edu- 
cate the public up to the use of any new article. You 
have got to educate the manufacturer up to the manu- 
facture of any new article, and you have got to educate 
the public, in the case of any ncAv jDrocess, to use any 
new process or to use any new machines. The public 
and the individual manufacturers are conservative; they 
do not jump at the chance of changing their existing plant 
or changing their existing methods of manufacture. The 



34 

inventor has to force his new ideas upon the public, and 
upon the individual manufacturers, in a great many cases. 
It is extremely hard to vrork up a new business under 
patents — extremely hard. Take the very case of the com- 
pany that I cited just a few moments ago. We spent 
something like f 250,000 before we ever got a cent of return 
in any way, shape, or manner. Now, I say, that under 
those circumstances, a manufacturer has a moral right 
to protect himself by buying up other patents that might 
be competing patents in his business, providing, of course, 
the inventor is mlling to sell those competing patents. 
It is a mere matter of bargaining between two men." 
(F. L. O. Wadsworth, XXI, 18-19). ^ 

^'I think it is entirely proper," said another officer of 
the Inventors' Gruild, himself a former associate of Edi- 
son, and a conspicuous independent inventor, ^'that the 
incandescent lamp, connected with which there is a chain 
of patents — there might be a hundred — entirely proper 
that all of those patents should be combined, if you will, 
in one ownership ; and that those people owning all those 
patents should use those as a monopoly, and under such 
terms as they consider best for the development of their 
business, — even if they are restrictive ones — as it is only 
a matter of a few^ years, and the ultimate good to the 
Nation depends upon the exploitation of the successful 
patent; and the exploitation of the successful patent in- 
volves necessarily the interesting of capital ; and the cap- 
ital will not be interested in a thing unless it has protec- 
tion that the patent law purports to give." ('H. Ward 
Leonard, IV, 9.) 

"All I want," said the chief engineer of an independent 
concern manufacturing mechanical appliances, "is to have 
an absolutely complete monopoly of my type of machine, 
and all alternate related constructions thereof ; and I want 
everybody else to exercise their wits to make a better one, 
if they can, but never to copy mine." (Spencer Miller, 
XXIV, 14). 



35 

Illustratioiis from actual experience were cited by many 
inventors and manufacturers: 

"A few years ago/' said one, ^'I undertook, at the in- 
vitation of the I^avy Department, to solve the problem 
of transshipping coal in midocean from a collier to a 
warship. We entered into a contract with the Navy De- 
partment, after presenting to them a plan which they re- 
garded as feasible, to produce such a device to be paid 
for after it had demonstrated its ability to transship coal 
in a moderate sea at a specified rate in tons per hour. 
The managers of the Lidgerwood Co. were opposed to this 
undertaking, on the ground that I would spend a large 
amount of money for a limited market, and also with the 
probability that some other inventor would reap the re- 
wards by inventing something a little simpler, a little 
cheaper or a little better than my device. My answer to 
that was that I proposed to apply the same method that 
I had succeeded in before ; namely, by studying out every 
possible new method by which this could be achieved and 
methods to obtain patents upon them, so that, as the art 
developed I might be able to turn the inventions which 
proved thei best solution. * * * 

''I developed another device for the Navy. I under- 
took to improve United States colliers, and produced a 
)new type of collier that has been of great advantage to 
the Navy. The plan I presented was considered for over 
^Ye years. * * * My machines under test delivered 180 
tons of coal per hour from one hatch with two men. We 
multiplied the output by 4%, and reduced the number 
of men employed from 35 to 2. I pursued my usual meth- 
od in this case. I not only patented the method that wa^ 
presented, but I patented every novel alternate method 
that I could invent. Are we to be deprived of those alter- 
nate devices, although made simply because some com- 
mercial rival wants to reap the rewards of years of labor 
and the expenditure of thousands of dollars? This would 
be the result under the compulsory -license clause. * * ♦ 



36 

**Tlie proposed compulsory-license law would utterly de- 
stroy the remaining hope of making a profit. Among 15 
patents enumerated, many are alternatives and not used. 
None are as good as those employed, but any one of them 
will work. If we should get to a point where the G^ov- 
ernment were demanding a great many of these machines, 
and this bill becamej a law, the commercial pirate would 
act under this law and demand a license under some of 
my unused devices, hence it would work a hardship to the 
manufacturer.'' (Spencer Miller, XXIV, 5-6). 

"A client of mine," said a well-known patent lawyer, 
"saw at once that a certain invention, if it could be em- 
bodied in a machine manufactured by him, would increase 
the capacity of the machine manufactured by him very 
greatly, so that every man to whom he sold the machine 
would get more out of it, the cost of production w^ould be 
reduced, and facility of operation increased. He bought 
the patent covering that invention. * * * 

"This client of mine took that patent and said to five 
separate inventors in his employ, ^Here is your problem; 
organize that invention into my present machine so as to 
get the most out of it.' Those five men worked months 
in a scientific laboratory, where they had every possible 
facility, and at the end of that time they had some 10 or 
12 different ways of embodjdng the invention in his ma- 
chine. They have not as yet finished, because, as I say, the 
next problem, is to find out which one of those w^ays is the 
best to use. It is highly probable they will find that the 
best thing tq do is to combine the ideas of two or three 
of the inventors in a new construction which will produce 
a new invention. Then my client will start in to build 
his improved machine. As the art develops, in three or 
four years the problem may change, and it is more than 
probable that my client will adopt some embodiment of 
that patent which has not yet been considered or one of 
those which he will now refuse to adopt. He will do it in 
a minute, if he can get a small improvement in his machine. 



^'The result of the above situation will undoubtedly be 
that this particular client, in order to provide for future 
developments, will secure a number of patents which may 
have no immediate value to him, which, looked at from a, 
narrow and shortsighted point of view, will be parallel. 
Somebody on the outside might, if he had the right, take 
one of them which my client w^as not using, and build a 
machine under it, although inferior to my client's machine. 
It is highly probable he might humbug the community into 
buying that machine, greatly to their disadvantage; par- 
ticularly if he cut his price so far as to appeal to that sort 
of shortsightedness which is characteristic of those who 
do not know much about machinery. My client needs all 
these patents as a reserve of ideas upon which to draw. 
He had to devise them as an inevitable incident in the 
development of the best possible machine. He can be 
trusted to building the best possible machine out of some 
or all of them, and is very likely to use later some that 
he does not use now. Why should his exclusive right to 
any of them be interfered with?" (Frederick P. Fish, 
XXVI, 8, 9.) 

Under the present Stanley Bill, a patent owner who has 
experimented with all forms of an invention, and has 
finally manufactured only the single form that has proved 
to him most satisfactory, may be compelled to license his 
rivals to use all the other forms of the invention in com- 
petition with himself. 

"Suppose,'' said a witness before the House Patent Com- 
mittee in 1912, "that a man has produced a machine, and 
then he has produced an improvement on it, and then he 
sees a chance to produce a second improvement which 
might be said to be parallel with the first improvement, 
and not a further descendant in the same line as the first 
improvement — that is, that the two improvements were 
equally desirable. He has made his dies and special pat- 
terns for manufacturing his machine embodying the first 
improvement; he has educated the public to buy this ma- 



38 

cMne of tlie first form tliat he put on/ tlie market. Here 
comes along a cliance to make another improvement, which 
would compete with the form that he has on the market. 

^'If you pass this compulsory license law, and he makes 
that improvement, his competitor can come in and say, 
^I demand a license under second improvement patent, be- 
cause he is not using it, and as I, cannot use the second 
improvement patent without using the parent patent, I 
demand a license under the parent patent.' So, the manu- 
facturer, by making this second improvement, has done 
himself an injury. He has split his monopoly in half 
and let his competitor in. The result is that he is not 
going to make any improvements. He is going to try to 
keep that thing paralyzed and standing, with no knowl- 
edge of any other improvement than his first improvement 
reaching the public, until after his patent has expired or 
nearly expired, because in that way he will not be open 
to this demand for a compulsory license." (Edwin J. 
Prindle, X, 16, 17.) 

The president of Thomas A. Edison, Inc., emphasized 
the same point : 

'^I make an invention," he wrote, "relating to a plow, 
obtain a patent on it, andi find that substantially the same 
results can be obtained in two other ways, and I obtain 
patents on these two forms, but limit my manufacture to 
the first form which I consider preferable. * * * jf 
I should manufacture and put on the market the second 
and third types of plow, no one could successfully apply 
for a compulsory license. In maldng three types of plow 
instead of one I would probably not be successful in mak- 
ing any of them so well or so cheaply as I could one f onn, 
yet if I felt that unless I did manufacture the second and 
third forms my competitors might do so, I would surely 
be justified in making tho§e forms myself, even though it 
meant an inferior article at a higher price. 

''I cannot see that if the patent law were amended in 
this respect it would promote the progress of science and 



39 

the useful arts. On the contrary, it would tend to make 
inventors distrustful of patents, to curtail their activities, 
to suppress inventions, and to conceal them as factory 
secrets." (Frank L. Dyer, X, 38-39.) 

How any system of assembled inventions, such as con- 
stitutes any one of a number of industries on which civili- 
zaQon now depends, would be affected by ''compulsory 
license" was explained by a well-known ]>atent authority : 

''Let me invite your attention, for example," said he, 
^ 'to the system of fire-alarm telegraphy. * * * Outside 
of all other instrumentalities employed in such a system, 
we know that the primary thing' is the signal boxes or 
transmitters that you see located around the streets. 
* * * I ask you to assume, if the Committee please, the 
creation and development, of the signal box in practically 
its present form. Then the inventor turns his attention 
to the complete central office equipment, the electrical bat- 
teries, the main and local circuits, the bus-bars, the 
switches, etc. It is quite within reason, and quite what 
may be expected, that he should consume a number of 
years in the development of such a highly organized and 
specialized piece of apparatus as that. 

"Would he do it, think you, Mr. Chairman, if it were 
possible for a competitor of his, struggling along the same 
path, to wait until he had done it and then get a com- 
pulsory license under the first patent covering the signal 
box?" (Samuel Owen Edmonds, XII, 10.) 

How the pioneer manufacturer, whose enterprise and 
capital had created a market for the invention which he 
had developed, could thus be crowded out of the market 
he had thus created was graphically described in 1912 to 
the House Patent Committee: 

"A manufacturer owns a number of patents on machines 
of the same general character," wrote a patent attorney, 
•'One of these patents is the parent or broad and basic 
patent containing claims which comprehend all of the 
structure shown by the subsidiary patents. Certain other 



40 

patents cover modifications of the original structure, and 
their claims are limited, these modifications covered by 
the limited claims heing distinctly within the scope of 
the broad claims of the basic patent. 

^The owner decides to manufacture one form of this 
invention. It may not be quite so good as one of the 
other forms, but it may be more practical to manufacture, 
it may be cheaper to manufacture, it may be more attrac- 
tive to the public. In other words, there may be numer- 
ous valid reasons for his not manufacturing the other 
forms. The' patent or patents covering the modifications 
mot manufactured are laid upon the shelf. A large trade 
on the selected form is built up by advertising. A large 
amount of money is spent by the owner upon this adver- 
tising. 

'^After the trade has been built up, and after the de- 
mand has been created, there comes a competing manu- 
facturer who requires that a license be granted to him 
for one or all of the modified forms covered by the patents 
not worked by the owner." * * * 

^'In the great majority of cases there is no demand on 
the part of the public for any patented device unless that 
patented device has been advertised and the sale of it 
pushed. The demand has to be created, and this compul- 
sory license law, in our opinion, Avould be of no benefit to 
the public, but would merely benefit the competing manu- 
facturer who could hold up a rival manufacturer, and 
threaten him with suit to compel the grant of a license, 
unless he granted the license initially for a consideration 
fixed by the would-be licensee himself. It would be Avithin 
the power of a strong commercial organization to compel 
such a license even though the weak organization were 
adequately manufacturing, for the reason that the court 
proceedings, to say nothing of appeals, cost heavily. It 
would likewise be within the power of a manufacturer to 
compel a poor patentee to grant him a license Avhether or 
no, and on such terms that the inventor would never desire 



41 

a proper compensation/' (R. S. & A. B. Lacey, XXVII^ 
77-78.) 

This is not an imaginary case. A well-known manu- 
facturer of printing macMnery made this clear: 

"Two men/' said he, "build similar machines to do the 
same work. One devises an ingenious little attachment 
which makes his machine much the more attractive to the 
buying public and gradually gets for him a large share of 
the business. The other applies for a compulsory license. 
Now, what is the measure of the fee he should pay? The 
device itself costs only a few dollars, but its sole posses- 
sion is what gives its inventor an advantage in his busi- 
ness. To share it at any price knocks the greatest prop 
from under the business his ingenuity and energy has built 
up. To compel him to share his business advantage by 
compulsory license would kill initiative." (Edgar H. Cot- 
trell, XVI, 16.) 

"I have created this line of invention," said the chair- 
man of the legislative committee of the Inventors' Guild, 
"and it has various ramifications Avhich are alternatiAX. 
It would be quite unfair to have me, after developing the 
line that is commercial, and having selected the particular 
one of the several alternative forms that I think is the 
best suited — if I do not manufacture several other alter- 
native forms, which manufacture would be quite uncom- 
mercial — that then my work should all go for naught. A 
competitor comes along and at small royalty, and perhaps 
with very much greater capital and better selling facilities 
and better organization, takes the business all aAvay from 
me. It is quite conceivable to my mind in this particular 
instance which I have in mind, that if I were forced to 
grant some concern in the electrical business that has 
?70,000,000 capital and an agent in every town in the 
country, and they were permitted to manufacture that 
invention of mine in the shape of an alternative form at 
a trivial royalty to me, I would be wiped out in a very 
short time." (H. Ward Leonard, III, 21.) 



42 

Instances to the same point might be multiplied. 

^'Take the Curtis turbine, or a harvesting machine/' said 
one of the witnesses before the House Patent Committee in 
1912. "A number of patents are all intermingled in these, 
so that, as I say, you cannot distinguish one patent from 
another, except by analysis and thought. In the effort to 
get the best possible machinery they have mixed up and 
combine'd their patents in the large machines. 

^^There may not be one of the patents in such a machine 
that in and of itself is of any great consequence or of any 
great value, and yet a man who has gotten up a different 
type of machine T\dll say, ^If I could only use that thing — 
that one little patent — then I could transform this poor 
machine of mine into a good machine.' And so, by getting 
a license under that one little patent, he can make a com- 
petitor for the company that formerly controlled it. And 
the hundreds and thousands of dollars invested in building 
up this first machine are jeopardized, except for the com- 
pensation given, which may be negligible, and probably 
would be, in the case suggested." * * * 

^'1 am talking about the case of alternative inventions. 
Two inventions being 0A\Tied by the same manufacturer, 
who builds one that he thinks is the best. Here is one 
device that is good; here is another one that is pretty 
nearly as good. Now, a man comes along and takes the 
right to use this second device. This is one thing that 
would happen. You would have patent-owning companies 
getting up lines of uneconomical machines just for the 
sake of fixing matters so that a compulsory license could 
not be demanded from them." (Frederick P. Fish, 
XXVI, 25.) 

A manufacturing inventor added his testimony: 

"A manufacturer of such machinerv, who is usuallv the 
inventor of improvements," he wrote, '^builds up a good 
business because he has given the public the benefit of 
valuable improvements in his class of machine. In his 
proper desire to make his machines more attractive to 



43 

users, he saw where another improvement might be pos- 
sible, so went to work on his idea. ^^Tiile experimenting 
he discovered what seemed to be a very good way to do 
what he had in mind, and patented it ; while working out 
the details he discovered and patented a better way ; when 
his machine was in operation still another mechanism ap- 
peared to work best, and he patented that. In good faith, 
he finally built and put on the market the form he believed 
would serve the public best. The whole idea of the im- 
provement was his, whether in its first, second, or third 
form. Nobody ever before thought of such an improve- 
ment, and might never have done so. The sole use of it 
has given him a good business, because his improvement 
has made his machine more useful to its buyers. 

"Some competitor wants that business, or a goodly share 
of it. All that competitor has to do, under the proposed 
new law, is to look over the inventor's patents, pick out 
some means or method which has not been used * * ♦ 
and compel a license with which he can rob him of the 
just reward for his investment of time, brains, and money.^' 
(C. B. Cottrell & Sons Co., XYI, 4, 5.) 

The conclusion expressed, in 1878, by the Senate Com- 
mittee on Patents, when it rejected the proposals then 
advanced to make radical changes in the patent laws, may 
be recalled : 

"The protection which the patent gives a patent owner 
in the results attained induces him, and is all that will 
induce him, to expend the time and the money — ^often sev- 
eral hundred thousand dollars upon a single machine — ■ 
in perfecting the invention; embodying it in a practically 
useful machine and introducing it to public use. The com- 
mittee are therefore convinced that the framers of the 
Constitution were wise in their judgment when, in intrust- 
ing to Congress ^the power to promote science and useful 
arts,' they gave them only one means for doing it, namely, 
'securino- for limited times to authors and inventors th<' 



u 

exclusive riglit to tlieir respective writings and discov- 
eries/ 

"No change sliould be made in tlie patent law to weaken 
the inducement which, in its ordinary and normal opera- 
tion in the common transactions of business, it offers to 
those who will successfully invent, and to those who, by 
perseverance and expenditure, will perfect inventions and 
the machines in which they are embodied, and push their 
introduction so as to put the public in possession of per- 
fectly working machines or a perfectly finished product.'^ 
(45th Cong., 2nd Session, Senate Report. No. 116, March 
5, 1878.) 

The proof, as has been shown, is overwhelming that the 
proposal for "compulsory license" embodied in the present 
Stanley Bill, would diminish this "inducement * * * to 
those who will successfully invent and to those who, by 
perseverance and expenditure, will perfect inventions * * * 
and push their introduction," and would, more seriously 
than any one can measure, deter manufacturers from risk- 
ing the money and effort required to develop and introduce 
inventions. 



J < t'V 



45 

V. 

HOW WILL ''COMPULSORY LICENSE" AEFECT 
LARGE SCALE INVENTION AND INDUSTRIAL 
EXPERIMENTATION ? 

Invention already lias developed many of tlie existing 
arts, so tliat to-day they are pretty near to wliat one of the 
witnesses before the House Patent Committee in 1912 
called ''the point of saturation." 

"For some years," this witness explained, "there have 
been very few improvements in many classes of machines, 
very few radical improvements in looms, very few improve- 
ments in sewing machines, like the Singer. * ^ * An art 
grows and grows during a tremendous struggle of compe- 
tition, but finally it gets to a point where pretty nearly 
everything is finished. There are always opportunities for 
improvements in details, for refinements, every one of 
which adds to the efficiency of the machine, when added 
and correlated to the rest, but there is a time when under- 
lying principles are worked out. There is no longer room 
for the rough kind of invention in shoe machinery, that 
was possible 25, 20 or 15 years ago. 

"The kind of invention that the community needs to-day 
is invention in the nature of laboratory research, such as 
is carried on in great institutions like Harvard College or 
the Institute of Technology. There must be an unlimited 
amount of capital^ which can be freely spent; there 
must be highly trained men working often with 
very little result, working all the time on refined 
ways of getting improved methods. This is a sort of in- 
vention that would not be carried on under any circum- 
stances, except by a big organization working in a big 
way, with what you might call a big laboratory, ready to 
spend any amount of money in experiment, ready to hire 
high-priced men to deal with these problems of scientific 
improvement." (Frederick P. Fish, XXIX, 140-141.) 



46 

In any art that lias reached an advanced stage of devel 
opment, invention can be advanced only by organized 
effort on a large and expensive scale. Single-handed 
genius and haphazard invention have had to give Avay to 
organized effort by specialized staffs of inventors, all work- 
ing in the same laboratory, on the same problems, with 
all the increased zeal and enthusiasm and all the multi- 
plied assistance which such organization alone can give. 

An eminent patent authority, whose work has brought 
Mm into close touch with the most advanced commercial 
inventions of the age, described the present state of the 
inventor's profession : 

"You come," he said, "to that great important class of 
inventors, the men who are developing the useful arts to 
the greatest degree of all, and who are in the great fac- 
tories of the country. Development of the useful arts 
would largely stop, if those men were not at work and 
were not encouraged ; which means if their employers and 
the capitalists were not encouraged as well as themselves, 

"The money that is spent in this kind of invention is 
very great. I have no doubt it runs up into many millions 
of dollars a year in this country. 

"What does that mean? Mr .Gifford told you about it 
in the case of the Singer Company. It means having a 
corps of men who study the problems of the industry, try- 
ing to find out exactly Avhat is needed everywhere. Those 
men have the co-operation of every man in the organiza- 
tion. Every salesman, every engineer, helps them and 
feeds up to them information. Such organizations have 
a great corps of inventors, who are dealing with those 
problems and solving them as completely and as well as 
possible. There may be several working on the same prob- 
lem, all working together on the team-work principle, or 
they may be working separately. Those men are happy ; 
those men are well satisfied. They get splendid pay, they 
get splendid treatment, they have the pride of achievemnt 
in their work. I should like to have you meet Prof. Elihu 



47 

Tlioinsoii, I should like to have you meet Prof. Whitney, I 
should like to have you meet Dr. Coolidge, and other men 
of the highest education and standing, who are of the type 
and who take the greatest possible satisfaction in the great 
work which they are doing as systematic inventors under 
the conditions of modern large organizations. 

^'There is another thing to which I should like to call 
attention. In many of these great industries we have got 
pretty near the point where not only is there little chance 
for great inventions, but where there is even less chance 
for those that can be made by the ordinary man working 
under ordinary conditions. So much has been accom- 
plished that the continued work of invention is of a new 
type. It is not carried on by men like Prof. Bell or the 
man that gets up a first-rate razor. It is carried on by 
way of definite research by real laboratory work, where 
men are solving in a scientific fashion and by team-work 
the refined problems that need solution. 

'^That is what is going on in many great factories in the 
country. The result is a constant enlargement from year 
to year of the field of industrial activity and constant 
growth and constant improrvement in the arts. These 
great factory inventive organizations must be fostered, or 
our industries will not keep up to the times. 

"If the patent law is changed so that the result of such 
work cannot be controlled by the patents on it, those who 
keep up and develop these great inventive laboratories will 
lose the incentive to keep them up to a high standard and 
the progress of the arts will be stayed. Any provision, 
compulsory license or other, that requires the ^working' of 
patents that ought not to be worked will greatly discour- 
age the maintenance of such laboratories." (Frederick P. 
Fish, XXVI, 28-9.) 

Manufacturers of specialties in which the range of inven- 
tion necessarily is narrow, consisting chiefly of improve- 
ments in technical details and refinements of principles 
already worked out in pioneer inventions, are thus obliged 



48 

to depend on themselves and their own workmen for inven- 
tions that will actually improve upon their OAvn products. 

''There must be a large percentage of the manufacturers 
of this country who are doing their own inventing," said 
a leading carpet sweeper manufacturer. ''I will say on 
that point that in the 36 years I have been in business 
never once has an invention on a carpet-sweeper oeen made 
by a man outside the carpet-sweeper factory that Avas 
worth the snap of your fingers. Never was one invented 
by a man who has not the knoAvledge of the art that was 
worth a picayune. We never bought it and never had any 
interest in it. The only inventions that count are the 
inventions that emanate from the men who understand the 
business." (K. E. Shanahan, V, 9.) 

Lines such as these furnish emphatic disproof of the 
frequent assertion that inventors under the existing pat- 
ent laws are prevented from manufacturing their OAvn 
inventions. 

"I started making corset inventions about twenty years 
ago," said one of the leading corset manufacturers of the 
country, ''when I was working for other people to whom 
I sold on a royalty basis. When we went into business 
ourselves, — we were three brothers, — I manufactured the 
neAver patents, which I made myself, and Av^e have noAV 
about 100 patents, probably more. We have ahvays five 
to ten patents pending in the Patent Office, and I am the 
designer and patentee of nearly all of them. One of my 
brothers is the patentee of most of the labor-saAdng ma- 
chinery for those patents. We control exclusively our oAvn 
business in regard to manufacturing. * * * 

'^Our money is iuA^ested in that business to the amount — 
inclusive of buildings, I dare say — of at least two million 
and a half dollars, not including values of our patents and 
trade-marks. * * * We started Avith comparatively noth- 
ing — we had little money. * * * We drew when aa^c AA^ent 
into business |6 a Aveek for living. * * * We commenced 
Avith some monev I had made workin2r for others, together 



19 

with some my brotliers liad made in tlie same Avay, and we 
worked along that line for eight or ten years mthout 
making any material financial headway, because the ideas 
which we advocated were new. * * * We did last year 
three and a half millions of dollars in this country.'' 
(Daniel Kops, XIII, 3, 4, 21.) 

"There are many businesses in the United States that 
have built on the inventions of their presidents," said a 
leading patent lawyer. ^'You take the Ferracute Machine 
Co., of Bridgeton, N. J., the company which makes the 
Government presses for the mints for coining metals, and 
that company is built on inventions of the president of the 
company, Mr. Oberlin Smith. The Potter & Johnston 
Company of Pawtucket, R. I., which makes metal-shaping 
machines, that is also built on the inventions of Messrs. 
Potter and Johnston. They are both prosperous. * * * 
Many inventors are employed by companies that put their 
inventions into their own businesses, and they get bonuses 
for the inventions, or they get permanently larger salaries 
for the inventions which they make, and in that way the 
company is able to keep abreast of competition, and the 
inventor himself is assured an adequate return. * * * The 
Calculagraph Co., of New York, which makes the machine 
for the telephone people, to measure the length of time 
that you talk when you are charged according to time ; the 
business of that company is based on the invention of the 
president, Henry Abbott. He is president of the company 
and built up the business. He not only made the inven- 
tion, but introduced it and built up the system of manu- 
facturing it. There are very many such companies in the 
United States where the inventor directly gets the benefit 
of his invention." (Edwin J. Prindle, X, 19-20.) 

Another patent lawyer, later a Commissioner of Patents, 
gave the same testimony: 

"With the exception, I think, of one plant, which has 
been unfortunate, every man with Avhom I have been asso 
ciated to anv considerable extent in the last 20 years has 



50 

done well with, his invention ; he has improved his position , 
he has even made money by the sale of his product, or 
he has gotten associations that have helped him, and he 
has been enabled to develop his patent lines and has gotten 
ahead faster and better than he would without them." 
(Thomas Ewing, Jr., X, 26.) 

Invention can be successfully carried on to-day in any 
of the advanced arts, only by concentrating inventive effort 
directly upon the particular problems presented by the 
next forward step in the art. 

Advised by the best informed experts as to what are the 
immediately pressing subjects that require inventive effort, 
the modem inventor, with the aid of an expensively ap- 
pointed laboratory and a large corps of assistants, sets 
himself to the task of working out just the invention that 
will achieve precisely the desired advance in the art. 

"Wherever a modern business concern is engaged in pro- 
moting the progress of the useful arts by developing inven- 
tions," explained a witness, "it is doing it in a complete 
and scientific fashion. That is, it first finds out the prob- 
lems to be solved. It has people who are watching the 
problems everywhere, Avho are constantly studying to learn 
what the public needs or demands. * * * it is not merely 
a question of accomplishing some result in some way; it 
must be done in a Avay that is reasonably cheap, reason- 
ably satisfactory, that will work and that will be a real 
advantage to the public. In order to work out such prob- 
lems, the concern may have many men, maiiy inventors, 
at work all the time trying to solve the same problem. 
Others on the outside may be working on the same prob- 
lem. If some one on the outside gets up an invention that 
is of value or which it is thought may have some value 
in the solution of any of these problems, the concern we 
are considering may buy that invention. Thus by the 
work of its own inventors or of outside inventors, a con- 
cern may find itself in possession of several inventions, 
each of which is a solution of the same problem. It is ob- 



51 

viously for tlie public interest tliat it sliould Imow as many 
ways as possible of getting at tbe desired result. Other- 
wise it may not find tbe best way. 

^'Tben it is just at tbe beginning of the real difficulties 
of its commercial effort. It must noAV pick out the best 
method of the many that have been devised and manufac- 
ture that, not an inferior invention. That is of the utmost 
consequence, because one way is the best, and it must try 
to select that way. Its reputation and success are at stake. 
It cannot put out an inferior product." (Frederick P. 
Fish, XXVI, 7.) 

Some conception of how prolonged and expensive this 
research and experimentation may be before a solution of 
the problem is reached that will be "reasonably cheap, 
reasonably satisfactory, that will work, and that will be 
a real advantage to the public," can be gathered from the 
number of patents that have to be used, or at least experi- 
mented with, before any important machine of a modern 
type can be produced. 

"I have in mind a machine that I was looking at the 
other day, "remarked an officer of the Patent LaAV Asso- 
ciation of Washington; "It says on the back of it, This 
machine is protected by 67 patents.' That concern, to my 
knowledge, owns some thousands of patents. Sixty-seven 
of them went into that particular machine. Now, lots of 
those patents are for little trivial things that save a few 
cents here and a few cents there. They are things invented 
by a corps of mechanics employed constantly at that work 
and doing nothing else." (William W. Dodge, XXYII, 
43). 

"The committee is entirely in error," said another patent 
authority, "if it undertakes to divide inventions into in- 
dividual units — this invention and the next invention, 
which are in competition. Almost every machine or method 
that is of any consequence to-day in the big manufacturing 
enterprises, which are the most important phases of our 
industrial development, embodies a large number of pat- 



52 

ents. There may be 10 or 15, and they may come from 
anywhere — one may be bought in Germany, one invented 
by a backwoodsman in Maine, 6 or 8 invented in the fac- 
tory where the device is built, and others in some other 
factory. 

"One of the tremendous problems of those who are doing 
the business of the country to-day is to develop the best 
machine or methods without infringing other j)eople's 
patents, because if they cannot get the best they are not 
living up to their obligations to the community as public 
servants, and they must strive to get the best or they fail 
in their duty. They must not let others have patents that 
will prevent their building the best machines possible if 
they can lawfully prevent it. Therefore, they must invent 
all that they can in their own factories, and buy outside, 
or they cannot build the best possible machines. That 
means, in many instances, the accumulation of many pat- 
ents relating to the same subject-matter, and it means the 
use of one or the other, but not of all, this year or next, 
as the case may be, in order to build the best possible 
contrivance. * * * 

"It is the constant and repeated experience of such a 
company that ha\dng started in with the method which it 
thinks is the best to reach the desired result, within a year 
or two years or three years it finds that the art and the 
requirements of the business have developed so that the 
best method turns out to involve one of the other methods, 
or a combination of one, two or three of the other methods 
which at first were discarded. 

"The result is that such a concern does not cease its 
investigations because it has once chosen a particular 
method. It continues to accumulate as many items of 
information, as many ways of solving the problem, as it 
possibly can, and it draws upon those all the time, corre- 
lating and changing its own views and endeavoring to 
develop the best method, as conditions and requirements 
change, by constantly watching the requirements of the 



53 

market and adopting something here, something there, and 
something elsewhere, and bringing all these suggestions 
and improvements together in order to get the best possible 
result. It knows that it must have and must acquire just 
as many inventions bearing on the subject-matter as it can, 
even though they may not seem to have any immediate 
usefulness, or it will find itself unable to build the best 
machine that it knows how to build because it does not 
own some necessary patent. It may be that this patent 
a short time before seemed to have no value, and that its 
usefulness became apparent only in connection with some 
later patent. Furthermore, in 9 cases out of 10, the best 
machine requires the use not alone of one particular pat- 
ent but of at least several other patents owned by the 
concern we have been considering which has been at work 
on this problem. It is to avoid, so far as possible, such 
situations as this which constantly arise, that a concern 
employed in developing a particular kind of machine en- 
deavors to acquire as many patents as possible bearing on 
the art." (Frederick P. Fish, XXVI, 7-9). 

Large manufacturing concerns to-day maintain expen- 
sive laboratories to an extent not dreamed of in former 
years. Referring to the Singer Sewing Machine Company, 
the patent counsel for that company said : 

"That company has in its factories what it calls experi- 
menting rooms. It has two in the Elizabethport factory ; 
it has one in the factory at Bridgeport, Conn. ; it has at 
least one in the factory in Scotland. 

"A man who is in any one of those experimenting rooms 
is paid a big salary, the largest of anybody in the factory, 
because of his inventive ability. His inventive ability very 
largely determines his salary, because if he is a good in- 
ventor his salary is larger. That man, when he invents, has 
the benefit of what? The system of the company requires 
that all of their agents — and they have thousands of them 
all over the country — shall make frequent reports from 
all parts of the country as to needs of the people in IheiT* 



54 

vicinity. If a man comes in and says, ^I want a machine 
that will do a certain work/ it is the agent's business to 
report that to the headquarters of the company, so that 
when an inventor starts to invent in any one of those 
rooms his efforts are directed in the right direction, so 
that they cannot be misdirected. He laiows beforehand 
that he is going to supply a need. An inventor on the 
outside, having no such facilities himself, just as like as 
not if he undertakes to invent will invent something that 
is not particularly required, and when he comes to offer 
it to a company like the Singer Co., they Avill say : 'Why, 
your thing is first rate, but we have no jjarticular sale for 
it; there is no demand for it.' It may be ahead of its time, 
or something of that kind. These men in the experimental 
rooms of the Singer Company have also this advantage: 
There is a patent department in the Singer factory ; there 
are three men employed at the present time in it who have 
nothing to do but look after and keep themselves posted 
as to what has been done. This man in the experimenting 
room, as soon as he conceives of a way of doing something, 
consults the patent department, and, perhaps, they will 
find that his way has been tried before, as indicated by 
prior patents, and has turned out to be a failure. So they 
say, 'You better not go ahead on those lines, because that 
will not result in success.' Again, he has advantage of 
consultation with the officers, the men who are old men 
in the business. You take Mr. Diehl, of the Singer Co. 
He is probably the most experienced man in the world as 
to what they have tried to invent which were failures ; and 
if this man in the experimenting room says, 'I am going to 
do this in that way,' Mr. Diehl can tell him, perhaps, in a 
moment, ^You cannot get long successfully that way, be- 
cause we have tried that years ago and it turned out to be 
a failure.' This man, I say, is inventing under an environ- 
ment that is bound to be rightly directed; it is bound to 
avoid all the pitfalls of failure that have wrecked pre\dous 
inventions, and it is above all thinofs for the advancement 



of science and the useful arts that that kind of invention 
should proceed, and that Idnd of invention should be 
fostered. 

^'The General Electric Company are not clients of ours, 
although we have done Avork for them, and I suppose we 
are more opposed to them than we are Avith them, but I 
should not want to be so free in condemning the General 
Electric Co. The General Electric Co. has done more for 
the advancement of the science of electricity and the arts 
in that line than any other company that ever existed in 
the world, I think. They have done it by offering the 
facilities that they have for the making and developing of 
inventions in that line. They have an enormous amount 
of capital invested in facilities for that purpose." (Liv- 
ingston Gifford, XIV, 7-8, 15.) 

Large corporations, it should be emphasized, are not the 
only concerns that maintain large inventive staffs and 
costly laboratories. 

Independent inventors, entirely unconnected with large 
^corporations, men like Thomas A. Edison, H. Ward Leon- 
ard, Dr. L. H. Baekeland, F. L. O. Wadsworth, Benjamin 
M. Des Jardins and Cortlandt F. Carrier, all of whom 
testified in 1912, before the House Patent Committee in per- 
son or by letter ( III, 17-27 ; IV, 3-28 ; IV, 28-45 ; XXI, 3-10 ; 
XXI, 10-31; XXIII, 26-37; XXHI, 32-34), carry on their 
work with their own corps of assistants in their own 
expensively equipped laboratories. The plant and equip- 
ment maintained by these independent inventors and by 
other members of the Inventors' Guild, an association of 
independent inventors, of which Thomas A. Edison, Peter 
CJooper Hewitt, Michael I. Pupin and H. Ward Leonard 
were members, have rivalled the plant and equipment maiu- 
tained by the largest corporations. 

The proposal for ^^compulsory license" embodied in th(» 
present Stanley Bill would virtually legislate all these 
plants and equipments out of existence. 



50 

"There would be no incentive for them if the patent 
statute were canceled," explained a witness to the House 
Patent Committee in 1912. "Their competitor or next-door 
neighbor, the next day after they had spent }100,000' in 
bringing out some improvement, could start in and manu- 
facture without the handicap of that |100,000 ; they simply 
could not afford to do it. So, you could modify the term 
of a patent and you could modify the reward to the in- 
ventor, but the question is, 'What would be the effect to 
the public? Would the public gain or lose by it?' '*' 
(Edwin J. Prindle, X, 11.) 



57 

VI. 

HOW FREQUENT IS THE ^^SUPPRESSION" OF 

PATENTS? 

At tlie close of the testimony whicli the House Patent 
Committee took in 1912 on this point, one of the witnesses 
summarized the evidence as folloAvs : 

"I am sure that there is no substantial amount of sup- 
pression of patents that in the public interest should be 
worked; but I respectfully submit that the committee 
should have before it some facts to the contrary before 
they assume it is not a fact; and I submit that they have 
no facts to the contrary whatever. It seems to me that 
there must be good evidence ]3roduced of injury caused 
by the present system to justify a change in the law under 
which our arts have developed, our industries have devel- 
oped, to the extent they have, and until specific cases are 
stated which we can examine and study and find have 
injured the public, the committee cannot make the assump- 
tion that there is any harm or any wrong under the present 
system. 

"On this particular point of the suppression of patents, 
the alleged suppression of patents, there is not a particle 
of evidence before the committee; there is not anything 
in print any^diere that I have seen, which indicates that 
that is a matter of the slightest consequence. Under those 
circumstances I respectfully submit that the committee 
should not attack the fundamental principles of the patent 
law for no purpose, and that such an attack is for no pur- 
pose. I respectfully submit, further, that the mere guess 
of the committee that such things might happen is not 
enough to justify violent action based on that mere guess. 
This general subject has been before several other com- 
mittees and not one case has been brought out so that it 
could be analyzed, so that it could be determined whether 
there was a real suppression of the patent. I should ex 



58 

pect to find some tliat could not be explained among the 
hundreds of thousands of patents now in force, but I 
respectfully submit that there are mighty few, and I think 
the number is absolutely negligible." (Frederick P. Fish, 
XXVI, 10-12.) 

Mr. Thomas A. Edison summed up the situation suc- 
cinctly : 

^'I have heard and read numerous statements that many 
corporations buy valuable inventions to suppress them, 
but no one cites specific cases. I myself do not know of 
a single case. There may be cases where a firm or a cor- 
poration has bought up an inv'ention, introduced it, and 
afterwards bought up an improvement and ceased using 
the first patent — suppressed it, in fact. Why should that 
not be done? It is for the benefit of the public that it 
should get the latest improvement. I cannot see why the 
public should be asked to change the patent law to enable 
a competitor to get hold of the disused patent so he could 
have a basis on which to enter into competition with the 
pioneer of the invention who has introduced an improved 
machine. 

"Before any changes in the laAV are made, let the ob- 
jectors cite instances where injustice has been Avorked on 
the public by the alleged suppression of patents for other 
reasons than those which were due to improvements." 
(Thomas A. Edison, XXIII, 34.) 

The distinction by Mr. Edison between willful suppres- 
sion of inventions, and the rejection of inventions, after 
careful experimentation and trial, in favor of the use of 
better and more useful inventions that accomplish the pur- 
pose more satisfactorily, must be kept firmly in mind in 
order to judge the situation fairly. 

"Xot all inventions have been used," declared a patent 
attorney. ''Some were not useful. Others could not be 
used without interference with some business principles 
that operated to the public advantage ; but taking the mat- 
ter up at large, inventions have been used to the necessary 



59 

extent during the life of the patents to give us in this 
country the great and earl}- development in the industries 
of Avhich we are so proud. - * * 

"I have not the slightest doubt you will find many in- 
ventors who will say that their inventions have been sup- 
pressed; I think it is very probable you will find cases 
in which they have not been used and have therefore been 
suppressed in that sense; but is there the slightest evi- 
dence that the invention was of the slightest value, that 
it T^^as worth developing, that it could be developed to the 
advantage of anybody? May it not be that, in most such 
cases, the invention could not have been worked except 
to the detriment of the public, because it was inferior to 
other things that were commercially practiced? The laws 
of business and of common sense stand in the way of 
the working of worthless or inferior inventions and it is 
in the public interest that this should be so; but is there 
here any showing that an invention that ought to have 
been worked has been suppressed? 

''I am not foolish enough to advance the proposition 
that if you ransack the Patent Office, among the million 
or more patents that have been taken out in this country, 
you will not find a patent here or there which has been 
^pigeon-holed' — to use another phrase that is sometimes 
employed; — ^which competent men would say might have 
been used to the public advantage. But, as to this i3roposi- 
tion, I have no hesitation whatever in saying that when 
Mr. Wadsworth and others like him make a statement of 
that sort, a dispassionate tribunal which investigated the 
matter would in almost every instance find that the in- 
vention was not worth developing ; that it could not have 
been practiced without sacrifice in economy and efficiency 
that would be contrary to the public interest; and that 
that was the reason why it was suppressed. In the vast 
majority of cases they would find that it is not worth 
developing, because it did not have real merit." (Frederick 
P. Fish, XXVI, 6-7.) 



60 

How necessary it is to reject inventioiis, which, careful 
experimentation and trial have proved inferior, and liow 
essential it is to use only those inventions wliicli experi- 
ence proves will most satisfactorily accomplish, their pur- 
poses is abundantly evident. 

'^Wlierever a modern business concern is engaged in 
i:)romoting the progress of the useful arts by developing 
inventions/' said a witness whose experience entitles him 
to speak with the highest authority, ^^it is doing it in a 
complete and scientific fashion. That is, it first finds out 
the problems to be solved. It has people who are watch- 
ing the problems everywhere, who are constantly studying 
to learn what the public needs or demands. * * * it 
is not merely a question of accomplishing some result in 
some way; it must be done in a way that is reasonably 
cheap, reasonably satisfactory, that will work and that 
will be a real advantage to the public. In order to work 
out such problems the concern, may have many men, many 
inventors, at work all the time trying to solve the same 
problem. Others on the outside may be working on the 
same problem, and if some one on the outside gets up an 
invention that is of value or which it is thought may have 
some value in the solution^ of any of these problems, the 
concern we are considering may buy that invention. Thus 
by the work of its own inventors or of outside inventors 
a concern may find itself in possession of several inven- 
tions, each of which is a solution of the same problem. It 
is obviously for the public interest that it should know as 
many ways as possible of getting at the desired result. 
Otherwise it may not find the best way. 

"Then it is just at the beginning of the real difficulties 
of its commercial effort. It must now pick out the best 
method of the many that have been devised and manufac- 
ture that, not an inferior invention. That is of the ut- 
most consequence, because one way is the best and it must 
try to select that way. Its reputation and success are at 
stake. It cannot put out an inferior product. * * * It 



61 

is the constant and repeated experience of such, a company, 
that having started in with the method which it thinks is 
the first to reach the desired result, wdthin a year or two 
years or three years it finds that the art and the require- 
ments of the business have developed so that the best 
method turns out to involve one of; the other methods or 
a combination of one, two, or three of the other methods 
which at first were discarded. The result is; that such a 
concern does not cease its investigations because it has 
once chosen a particular method. It continues to accumu- 
late as many items of information, as many ways of solv- 
ing the problem, as it possibly can, and it draws upon those 
all the time, correlating and changing its own views and 
endeavoring to develop the best method, as conditions 
and requirements change by constantly watching the re- 
quirements of the market and adopting something here, 
something there, and something elsewhere, and bringing 
all these suggestions and improvements together in order 
to get the best possible result. It knows that it must have 
and must acquire just as many inventions bearing on the 
subject matter as it can, CA^en though they may not seem 
to have any immediate usefulness, or it will find itself un- 
able to build the best machine that it knows how to build 
because it does not own some necessary patent. It may 
be that this patent a short time before seemed to have no 
value, and that its usefulness became apparent only in 
connection with some later patent. Ftirthermore, in 9 
cases out of 10 the best machine requires the use not 
alone of any particular patent, but of at least several 
other patents owned by the concern we have been consid- 
ering which\ has been at work on this prob]em. It is to 
avoid, so far as possible, such situations as this which con- 
stantly arise, that a concern employed in developing a par- 
ticular kind of machine endeavors to acquire as many 
patents as possible bearing on the art. * * * 

'^I do not think that there is any limit to the extent to 
which a concern which is doing its work with the strenu 



62 

ous good faith which, I respectfully submit, characterizes 
modern business in the matter of quality of work pro« 
duced — for if there is any one thing of which I am sure, 
it is that the manufacturers of this country are trying to 
give to the public; the best possible machinery — I do not 
think there is any limit to the extent to which such a con- 
cern which is endeavoring to meet modern conditions by 
supplying the best possible apparatus should be permitted 
to purchase patents. * * * 

"The one patent owner who buysi out what patents come 
along is continuing his own business and is doing what 
is necessary, obviously necessary, for the development of 
his own business — that is, he wants a store of ideas from 
Avhich he can draw all the time, and that is why he buys 
the patents. He does not buy them to suppress them.'' 
(Frederick P. Fish, XXVI, 7, 11.) 

The modern manufacturer, therefore, must collect pat- 
ents from everywhere, carefully compare them, thoroughly 
try them out, promptly reject the unpromising, expen- 
sively develop the more promising, and finally, out of all 
his expenditure and trouble and his entire collection of 
patents, produce a mechanically perfect and commercially 
practicable result. 

Tills task is frequently tremendous. 

"The committee is entireh' in error," continued the wit- 
ness last quoted, "if it undertakes to divide inventions 
into individual units — this invention and the next inven- 
tion, which are in competition. Almost every machine or 
method, that is of any consequence today in the big manu- 
facturing enterprises, which are the most important phases 
of our industrial development, embodies a large number 
of patents. There may be 10 or 15, and they may come 
from anywhere — one may be bought in Germany, one in- 
vented by a backwoodsman in Maine, 6 or 8 invented in 
the factory where the de^i-ce is built, and others in some 
other factory. One of the tremendous problems of those 
who are doing the business of the country today is to de- 



68 

volop the best machines or methods, without infringing 
other people's patents ; because if they cannot get the best, 
they are not living up to their obligations to the com- 
munity as public serA^ants, and they must strive to get tlie 
best or they fail in their duty. They must not let others 
have patents that will prevent their building the best 
machines possible, if they can lawfully prevent it. There- 
fore, they must invent all that they can in their own fac- 
tories, and buy outside, or they cannot build the best pos- 
sible machines. That means, in many instances, the ac- 
cumulation of many patents relating to the same subject 
matter, and it means the use of one or the other, but not 
of all, this year or next, as the case may be,, in order to 
build the best possible contrivances. * * * 

"A client of mine saw once that a certain invention, if 
it could be embodied in a machine manufactured by him, 
would increase the capacity of the machine very greatly, 
so that every man to whom he sold the machine would 
get more out of it. The cost of production would be re- 
duced, and facility of operation increased. He bought 
the patent covering that invention. The patent was of 
small value in the form in which, it came to him. That 
IS; if anybody were to build a machine under that patent 
alone, it would not be a very good machine. That is the 
case with many patents, particularly if they are patents 
taken out at the beginning of some marked improvement. 

^'This client of mine took that patent and said to five 
separate inventors in his employ, ^Here is your problem; 
organize that invention into my present machine so as to 
get the most out of it.' Those ^ve men worked months in 
a scientific laboratory, where they had every possible facil- 
ity, and at the end of that time they had some 10 or 12 
different ways of embodying the invention in his machine. 
They have not as yet finished, because, as I say, the next 
problem is to find out which one of those ways is the best 
to use. It is highly probable they will find that the best 
thing to do is to combine the ideas of two or three of the 



64 

inventors in a new constmctionj TX'hicli will produce a 
new invention. Then my client will start in to build his 
improved machine. As the art develops, in three or four 
years the problem may change, and it is more than prob- 
able that my client will adopt some embodiment of that 
patent which has not yet been considered, or one of those 
which he will now refuse to adopt. He will do it in a 
minute, if he can get a small improvement in his machine. 

^^The result of the above situation will undoubtedly be 
that this pai-ticular client, in order to provide for future 
developments, A^dll secure a number of patents which may 
have no immediate value to him, which, looked at from a 
narrow and shortsighted point of view, will be parallel. 
Somebody on the outside might, if he had the right, take 
one of them, which my client was not using, and build a 
machine under it, although inferior to my client's ma- 
chine ; and it is highly probable he might humbug the com- 
munity into buying that machine greatly to their disad- 
vantage; particularly if he cut his price so far as to ap- 
peal to that sort of shortsightedness which is characteris- 
tic of those who do not know much about machinery. My 
client needs all these patents as a reserve of ideas upon 
which to draw. He had to devise them as an inevitable 
incident in the development of the best possible machine. 
He can be trusted to build the best possible machine out 
of some or all of them, and is very likely to use later some 
that he does not use now. Why should his exclusive right 
to any of them be interfered with?" (Frederick P. Fish; 
XXVI, 8, 9.) 

The case just described is universal in all the highly 
developed industries : 

"The Edison lamp patent, for example,'' to quote a 
former president of the American Telephone and Tele- 
graph Company, "did not show a structure which, as de- 
scribed, was of commercial value by itself, but it soon be- 
came of enormous value to the public because other in- 
ventions were added to it. The first Bell telephone could 



65 

hardly talk. ^Yhsit difference did it make? The idea was 
there, and inside of 18 months or two years, other im- 
provements were added, and we had first-class telephones." 
(Frederick P. Fish, XXVI, 8-9.) 
Other instances have already been cited above. 
Viewed mth all the facts in mind, which the witnesses 
above quoted developed before the House Patent Com- 
mittee in 1912, it is plain that genuine instances of "sup- 
pression" of patents are practically unknown. 

"I do not know of any, of my own knowledge or informa- 
tion, which have been locked up that amounted to any- 
thing," said the patent counsel of the Singer Sewing Ma- 
chine Company. "If you said it would prevent some being 
locked, irrespective of whether good for anything or not, 
I suppose it would open up some which had not been pro- 
moted or worked, but I do not believe that they w^ould be 
any advantage to the public, and I do not believe any are 
locked up that amount to anything." (Livingston Gifford, 
XIV, 9-10.) 

"I can say that any number of patents are suppressed, 
but does that prove the case?" remarked another patent 
lawyer. "I respectfully submit that in a matter so im- 
portant as this the case against the present law should 
be proved. People may come before this committee and 
say : ^Here is a certain patent that has been suppressed.' 
They may point out five or one hundred or a thousand pat- 
ents which may have been suppressed. Even if they did, 
this number would be trivial compared with the total busi- 
ness in this country which is based on patents. But fur- 
ther than that, I am just as sure as I stand here, that 
an expert, acquainted with the arts to which those pat- 
ents which it was claimed were suppressed related, would 
say as to at least nine-tenths of them: ^Why, of course, 
that patent was not used; not so good a machine can be 
made under it as under the other patent now in use, and 
it has not any particular value in and of itself. It would 
have been an economic waste to have used it. Its only 
value, if it has any, is that in it are some ideas which can 



66 

be taken and combined with other ideas to make a machine 
that is unlike either.'" (Frederick P. Fish, XXVI, 10, 
11.) 

"The idea that patents in large proportions are ^locked 
up' in the objectionable way in which this term is used 
is largely based upon misinformation/' declared the presi- 
dent of the Patent Law Association of Washington. "It 
is true that thousands of patents are in force which are 
not in use; it is probably equally true that a large per 
cent, of the owners of those patents would be very glad 
to have them in use. It will be found, in many cases, that; 
the invention forming the subject matter of the patent not 
in use is either impracticable or not as good as something 
else for the same purpose on the market; that the owner 
of the patent lacks the business ability or the necessary 
capital to put his invention into use ; or has such an exag- 
gerated opinion of its value that he will not make reason- 
able terms with others having the ability and capital to 
profitably undertake the exploitation of the invention. It 
is true that, in many arts, the machines of today are quite 
different from the machines of a year ago, and the ma- 
chines of 10 years ago, manufactured by the same con- 
cerns for the same line of work, are scarcely recognizable, 
as bearing any relation whatever to the modern up-to-date 
product. It may be that the development of the machine 
from its original form to its latest form has been brought 
about by a series of inventions, the result of experiment 
and experience, and also by an endeavor to enlarge its 
field of usefulness or to adapt the machine for new^ lines 
of work which have grown up with the development of 
the arts. These results may have been achieved by a 
multitude of inventions, each the subject of a separate 
patent, so that the perfected machine, instead of being the 
subject of one patent, represents the embodiment of the 
inventions in dozens or hundreds of patents. The latest 
and best form of a machine may be illustrated in the lat- 
est patent containing claims for some of the latest im- 



(IT 

provements thereon, but it would not follow tliat the 
dozens or, perhaps, hundreds of other patents which have 
been secured in the course of the development of the ma- 
chine are ^locked up/ for the single machine would itself 
represent the embodiment, the use, and the practice of 
all of the inventions, of all of the patents, so far as avail- 
able at this time." (E. W. Bradford, XXVII, 50-1.) 

"In my experience of over 25 years," said another high 
patent authority, ^'I have not heard of any patent being 
^buried.' While I have, in common with others, heard 
rumors of such, I have never ascertained that, as a matter 
of fact, patents are buried, certainly not to an extent as 
to materially injure or affect the general public welfare." 
(L. S. Bacon, XXYII, 106.) 

"I can say, from my own experience," stated a repre- 
sentative of the Patent Law Association of Washington, 
"that I know of no instance of any such suppression in 
the sense in which that term has been used by and before 
this committee. It is true that the manufacturing con- 
cerns buy up a very large number of patents, but it is 
equally true that they draw from those patents for the 
improvement of their concrete structure." (William W. 
Dodge, XXVII, 36.) 

'^I do not think very many valuable patents are pigeon- 
holed," said the chief engineer of a w^ell-known independ 
ent manufacturing concern. "Anything that can be sold 
at a profit is sold' at a profit." ( Spencer Miller, XXIV, 

11.) 

The reason why "suppression" of patents practically 
never occurs is obvious ; the self-interest of the patent own- 
er always lies in the direction of using any invention 
that really accomplishes its purpose more satisfactorily 
than the existing art. 

"The agitation for compulsory license," wrote a prom- 
inent manufacturer, "we believe to be largely due 
to an idea that the public is losing the benefit of 
thousands of patents ; because they have been purchased 
by a few trusts for the purpose of pigeon-holing them and 



68 

avoiding the expense of making tlie improvements tlieir 
use would compel. The fact is that competition takes 
care of such a situation when it exists, except in the very 
rare cases where there is no competition. For every such 
case there are many thousands where competition is very 
keen and the public profits exceedingly." (C. B. Cottrell 
& Sons Co., XVI, 4.) 

'^I believe," said the president of an independent elec- 
trical concern, ^'that what one writer on^ economics calls 
scientific selfishness as distinguished from unscientific 
greed will automatically work out the matter to the best 
public interest, without the necessity for a specific law 
on the subject. If a man owns a patent on an invention 
greatly needed by the public, he is, on the average, pretty 
certain to begin its manufacture as soon as he reasonably 
can. I believe that the introduction of some more or less 
revolutionary inventions should, in any case, be gradual, 
because of the destruction of values which might occur if 
the improvement were introduced suddenly and broadly." 
(Arthur C. Eastwood, XV, 8.) 

^'There are very few manufacturing industries today 
who have not more or less competition," explained a lead- 
ing patent authority, ^^and this competition is, as will un- 
doubtedly be admitted, and which is certainly well recog- 
nized, a competition built up by and through inventions 
and patents. Inasmuch as a patented invention carries 
with it the monopoly prescribed by the statutes, manifestly 
the business end of the proposition would be and is, or has 
been, to introduce the patented invention or improvement 
so as to more effectually meet the general competition. It 
is this that stimulates invention, stimulates the manu- 
facturer to acquire inventions, and stimulates capital to 
undertake the promotion of inventions." (L. S. Bacon, 
XXVII, 106.) 

Patent lawyers added the same testimony. 

^'The whole tendency of the times," said a distinguished 
Boston patent lawyer, "the manufacturing spirit of to- 



69 

day, and competition, which, is most strenous even in in- 
dustries which rely upon and wort under patents, forces 
the use of the best instead of any inferior devices. This 
last case is, in my judgment, a very uncommon case ; that 
is, where there is a parallel patent which has been pigeon- 
holed, which is exactly parallel in all respects to a patent 
in use. I am assuming that there are such cases, and I 
respectfully submit that there is nothing in public policy 
that makes it wrong or offensive that that should be done.'' 
(Frederick P. Fish, XXVI, 10.) 

"The manufacturer," said a well-known New York pat- 
ent lawyer, "must make the most up-to-date article that 
he can, for fear that his competitor will discover something 
that is equally good or better that does not come under his 
patent. Thus I do not think it is true, to* a very great ex- 
tent, that manufacturers suppress inventions that are real- 
ly improvements." (Edwin J. Prindle, X, 17.) 

In its report in 1912, the House Patent Committee went 
outside of the testimony given before it for evidence of the 
"suppression" of patents by which to support its asser- 
tion that "patents in the United States are brought up in 
large numbers for the purpose of suppressing competition." 
This matter, the committee declared, "has been the sub- 
ject of comment and complaint in the public press for 
years." But the committee did not specify a single in- 
stance that "has been the subject of comment and com- 
plaint in the public press." 

The value of such "comment and complaint" was dis- 
cussed by several witnesses : 

"There are many inventors in this country," said one 
witness, "who will say that their inventions have been 
suppressed, just as there are many law^^ers and doctors 
who will say that they have never been appreciated at 
their true worth. That will account for the charge of sup- 
pression, in my judgment, in a very substantial number 
of cases — the fact that the man who makes the charge is 
biased ; for the man who makes the charge is very likely 



70 

to be biased by his own pride, bis own feeling that he has 
not had his due, and, more than that, by his ignorance.'^ 
(Frederick P. Fish, XXVI, 12.) ■ 

"This is the source,'' said another witness, "of this cry 
of suppression. Every inventor whose invention is not put 
upon the market, who is not able to command the capital 
to exploit that invention, assumes immediately that the 
great trusts and corporations are conspiring and combin- 
ing to prevent that invention going into use. There is 
absolutely no foundation in fact for any such theory." 
(William W. Dodge, XXVII, 36.) 

The more advanced the art becomes, the more may be 
expected this unfounded "comment and complaint" that 
patents are being "suppressed." The reason is plain: 

"It is so common in all these arts," one of the witnesses 
explained, "for a man who knows just the surface of things 
to think that certain thing would be useful, when the man 
who knows the real inside of the art knows that it will 
not be useful, because he, and he alone, knows the change 
of mechanism and the reactions throughout the organiza- 
tion that would be involved in introducing a particular 
idea; and he would reject what somebody else might think 
was useful." (Frederick P. Fish, XXVI, 13.) 

The telephone business is an example; of this; and out 
of his experience in that business, the same witness, who 
was a former president of the American Telephone and 
Telegraph Company,^ testified: 

"I had something to do with the Telephone Company 
a number of years ago. There were a number of people 
who resented the fact that there was not individual sig- 
naling on a four-party line, which could be done per- 
fectly well. We had several sets of patents on it. What they 
did not know was this : that no mechanism for this purpose 
could be devised which would keep in order; that where 
it was placed on a four-party line it added enormously 
to the expense of maintenance, it added to the com- 
plication of the mechanism, and it led to a great increase 



71 

in breakdowns throughout the system, and bad ser\dce, 
so that those) on the inside felt it would be a most fatal 
mistake, for the sake of a slight advantage, to introduce 
an enormous number of disadvantages. That illustrates 
what I mean. Superficially, the man on the outside might 
say that it was a beautiful thing. They have other ways 
now of working out the scheme, which help out a good 
deal, but the old inventions never would have worked." 
(Frederick P. Fish, XXVI, 13.) 

"Let us take an extreme case," said the same witness, 
'^of which I do not think there are many instances. A man 
has two patents, each of which is complete in itself and 
each of which is operative. He knows, because he studies 
the art that one is better than tliej other. That is substan- 
tially the Paper Bag Case, where the plaintiff was making 
first class machines under one patent, and held another 
patent which he was not using, and which, we will as- 
sume, was radically independent of the one under which 
he Avorked. His machines were making exactly the same 
paper bags that could have been made by machines built 
under the other patent. He spent, very; likely, hundreds 
of thousands of dollars in the development of the machine 
he Avas using. He gives the public the article that they 
want made on machines built under the patent which he 
uses. I say, that under those circumstances, there is ab- 
solutely no reason, based upon public policy, why that man 
should not hold this second patent which he is not using 
for the sake of protecting him in the use of his first idea. 
That would give him the monopoly of the manufacture of 
one particular land of paper bags only, and perhaps not 
of that. There are many kinds of paper bags made in 
competition with each other; the patentees and manu- 
facturers of today are trying toi find the best machines for 
making thtem. It may be that he invented the second 
patent in his own factory. If he purchased it, his object 
very likely was that he might have this other way of mak 
ing these same bags, so that if this other way turned out 



72 

to be a better way lie m%ht use it. If, in tbe course of 
time, tbis^ second invention appears to be tbe better way, 
be will use it/' (Frederick P. Fisb, XXVI, 9, 10.) 

Taking leave of tbe alleged instances of ^^suppression 
of patents" relied upon by tbe House Patent Committee 
in its Eeport in 1912, it may not be amiss to quote tbe tes- 
timony of tbe same witness, wbo is a leader of tbe patent 
bar, and bas appeared in most of tbe important patent 
cases before tbe Supreme Court of tbe United States in 
recent years: 

''I personally can not tbink of an instance in my career 
of a meritorious patent being suppressed. I bave known 
of tbe cbarge but bave in every case knoAvn tbat it was 
unfounded.'' (Frederick P. Fisb, XXVI, 13.) 

Tbe only "suppression of patents" tbat tbere actually is, 
and tbe only remedy tberefor tbat really exists, were de- 
scribed by anotber witness before tbe House Patent Com- 
mittee in 1912 : 

"Tbere is suppression because of tbe poverty of tbe in- 
ventor, making tbe application for patent economically 
impossible. Tbe proposed law would in no way improve tbe 
conditions or prospects of inventors in tbis class, and tbe 
great majority of inventors are very close to poverty or 
actually in it. Tbis cause of invention suppression, or 
ratber witbbolding, can be modified by rendering patent 
property more secure, and rendering tbe enforcement of 
patent rigbts more definite and less costly * * * It is tbe 
policy of many manufacturers to absolutely refuse to buy 
patents, owing to tbe prevailing belief tbat patents do not 
give any real protection, and owing to tbe runious costs of 
patent litigation." (Josepb J. O'Brien, XXVII, 99, 100.) 

Far from proposing a remedy for tbis involuntary "sup- 
pression of patents," tbe Stanley Bill would actually tend 
to increase it. 



73 

VII. 

HOW WILL '^COMPULSORY LICENSE" AFFECT 
THE NUMBER OF INVENTIONS PATENTED 
AND MADE PUBLIC? 

Whenever a patent is issued under the existing patent 
system, the public obtains two new valuable rights, either 
one of which is far more valuable than the patent in the 
hands of the patent owner. 

These rights are : first, absolute freedom at the expira- 
tion of the seventeen-year patent period to use the patented 
invention without paying anybody anything for such use; 
and second, immediate knowledge and complete informa- 
tion concerning the entire discovery and invention for 
which the patent is issued. 

''The patenting of an invention under the law,-' said 
Thomas A. Edison, addressing the House Patent Commit- 
tee in 1912, "is the making of a contract by which the 
inventor gives to the Nation a clearly stated public dis- 
closure of his secret process or manufacture, and the con- 
sideration given by the Nation to the inventor is the ex- 
clusive right to the invention for a specified limited time 
within which to secure the greatest benefits from his in- 
vention." (Thomas A. Edison, XXIII , 32.) 

Indeed, the originality and the glory of the American 
patent system consists in its recognition of the value of 
this disclosure to the public. 

"When the Constitutional Convention met," said the 
president of the Patent Law Association of Washington, 
"its members had before them and under consideration the 
English idea, and a suggestion of a different idea in the 
practice of the colonies. The English idea had been to 
encourage monopolies, so that the introduction of a new 
trade or a new art was the essence of the law. The con- 
stitutional idea, however, was that of encouraging domestic 
invention; and, in the first patent law of 1790 and in all 



74 

the subsequent amendments to that law, the basic idea 
has been to encourage original invention. 

^'The introduction of those inventions into use was Avise- 
ly left to the incentives of business enterprise. The in- 
vention was to encourage inventive thought, to secure a 
disclosure of the inventive thought as promptly as pos- 
sible. It was not deemed wise to require that the inven- 
tive thought, which might oe years in advance of the day, 
should be withheld until the inventor had been able to 
make provision for actually introducing the manufacture. 
Tlie sooner the inventive thought was disclosed, the sooner 
it became public property. The sooner the inventive 
thought was disclosed, the sooner it would be an incen- 
tive to others to improve upon that inventive thought. Jt 
was intended to offer the strongest incentive for a prompt 
application and disclosure. Inventors were to be made 
to feel the necessity of promptly completing their inven- 
tions; and this they could do either by actually reducing 
to practice the invention or by filing an application for a 
patent. They need not provide in advance for the manu- 
facture, the trading. 

^^When it is conceived that the essential spirit of the 
Constitution and the patent law is to benefit the public 
by securing a disclosure, it is clear that the disclosure 
should be prompt and complete. 

''When the inventor has disclosed his invention — that 
is to say, when the patent is granted and the disclosure 
is given to the public— he has done all that he is rciquired 
to do. He has completed his bargain. This it is which 
has distinguished the laws of the United States for over 
120 years from the majority of other patent laws, and 
it is this spirit which has been recognized by all the Avorid 
as the ideal spirit of the patent law, toAvard AA^hich other 
laws are tending.'' (Walter F. Rogers, XXVII, 6-7.) 

The disclosure of the invention, AA^hich the inventor 
makes in consideration of receiAdng a patent, is the funda- 



mental and all-important feature of the American patent 
Siystem. 

The Ofacial Gazette of the United States Patent Office 
prints every week the claims of all patents issued during 
the week before ; and copies of any patent may be obtain- 
ed for a few cents each. Consequently every invention pat- 
ented in the United States is promptly disclosed to every 
manufacturer, inventor and technical expert in the coun- 
try. Every new idea is promptly circulated among those 
most capable of utilizing it. Every patented invention, 
therefore, becomes potentially the cause of every useful 
and important invention. Inventors not only may improve 
on the specific idea embodied in the patent already issued 
and published; but also are inspired to work out their 
ideas for accomplishing the same result which the publica- 
tion of the patent suggest to them. The publication of 
patents therefore, educates everj manufacturer, inventor 
and technical expert throughout the country; starts trains 
of ideas Avhich frequently lead to important improvements 
in radically different directions ; and affords just the kind 
of information and inspiration needed to start lines of 
thought, investigation, and experimentation that develop 
transportation, the transmission of intelligence, the dis- 
tribution of power, the art of healing, the control of di- 
sease, the increase of comfort, and all the things that in 
the phrase of the Constitution ^^promote the progress of 
science and useful arts." (Frederick P. Fish, XXYI, 27- 
28; Livingston Gifford, XFV, 4.) 

In exchange for this invaluable public right, the patent 
owner receives merely the exclusive right to his invention 
for the limited period of seventeen years. 

"A patent," said the president of the American Insti- 
tute of Chemical Engineers, "is simply a contract between 
the Nation and an individual, the inventor. By that 
contract, the inventor discloses to the community at large 
the results of his intellectual work; by doing so, he en^ 
ables others to get acquainted with his Avork and to iin 



76 

prove thereon, and this stimulates further research, inven- 
tion, and enterprise. You will find that newly disclosed 
patents are usually followed in rapid succession by several 
improvements thereon, conceived by others, but patterned 
on the original invention. The inventor, in disclosing his 
secrets, confers a benefit on the Nation and the Nation 
in turn gives him for a rather short number of years the 
sole use of his invention, followed inimediately after- 
wards by absolute confiscation in favor of the public. The 
period of this limited monopoly is none too long if we take 
into consideration the time it takes tO' develop an inven- 
tion into commercial shape; in many cases inventions 
reach the money-earning stage only after the patents on 
w^hich they are based have expired. In the meantime, the 
disclosures made by the inventor stimulate enterprise and 
further invention and induce the ideal form of competi- 
tion — competition by improvement." (Dr. L. H. Baeke- 
land, IV, 33-34.) 

The exclusive right to his invention for the seventeen- 
year patent period is the only thing that the inventor re- 
ceives in exchange for the immediate disclosure of his 
invention to the public, and the ultimate freedom to the 
public to use his invention without restriction. Obviously, 
therefore, the inventor will not be willing to take out a 
patent whereby these rights are surrendered to the public, 
unless the patent affords him the protection necessary to 
insure him the exclusive right in his invention for the 
full period of the patent. 

"The inventor," explained a Washington patent law^^er, 
"has something which he may keep secret. He need not 
divulge his secret. He may, if he chooses, employ his in- 
vention in some practical art. But no one, no law, can 
force him t6 make, use or sell the thing which is the sub- 
ject matter of his invention. He is, however, at the mercy 
of anyone who discovers his secret, and therefore is gener- 
ally willing to accept the proposition of the Grovernment 
that he shall divulge his secret, that he shall disclose it 



77 

by means of a patent. When lie is asked to disclose this 
invention lie is promised a reward. He is not promised 
that he shall have a right to make, use, or sell the inven- 
tion. He had that always. He had that by the common law. 
He had that as a natural right. The bargain is, as I have 
said, that he shall have the right to exclude others from 
making, using, or selling the invention. There can be no 
feasible limitation upon the grant of exclusion within the 
terms of our laws and within the spirit of the Constitu- 
tion.'' (Walter F. Rogers, XXVII, 11.) 

Even under the existing patent system, inventors are 
reluctant to patent processes which, once disclosed to the 
public, can be easily copied with little chance of detection 
and prosecution for infringement of the patent. 

"I have," said a conspicuous member of the Inventors' 
Guild, "several things which I found it would be prac- 
tically impossible for me to get patents on which should 
be protected, and I am manufacturing them and have been 
for years, and they are in the nature of enamel processes, 
and the ingredients of those enamels and the formulae and 
the method of treating and handling are matters which 
have never been published, and to a large degree they 
tend to protect me. If the patent laws were such as they 
should be, if I really could get the protection that it was 
the intention of our patent law that I should get, I would 
have published all those things and gotten the patents, 
but I knoAv from experience that the publication of those 
things, the full publication of them, would merely mean 
that I would be wiped out completely by the competition." 
(H. Ward, Leonard, IV, 23-24.) 

"My first successful invention here in this country," 
said one of the leading chemists of the country, "was a 
new photographic process called 'Velox' paper. At that 
time I was not rich enough to take out a patent and to 
defend it at the same time. So I knew that my competi- 
tors would have swamped me by infringing the patent, 
and there would have been very little chance of my de 



78 

fending my rights. So I practiced it secretly, and after I 
made the business a success, then I sold out to a large 
corporation at my terms." (Dr. L. H. Baekeland, IV, 29.) 

Howc disastrous would be the consequence of diminish- 
ing the inducement by which the disclosure of inventions 
is now induced can be understood only by recalling the 
conditions which preceded the existing patent system. 

''Before the enactment of the patent statute," said a 
New York patent attorney, "when a man made an inven- 
tion or a discovery the only way to make any profit out 
of it was tO) keep it secret. The moment he disclosed it, 
anyone else could use it. 'He may have spent a great 
deal of time and money in developing that invention or 
discovery, but his competitor, the moment he learned the 
secret could begin to use it without any handicap of the 
previous expense. 

"So it resulted in inventions being kept secret. A typical 
instance is that of the discovery of the secret of making 
porcelain by John Frederick Bottger in 1710. The Elector 
of Saxony discovered that he had made this invention or 
discovery, and he locked him up in the Castle of Albrechts- 
burg and kept the drawbridge up, and swore the workmen 
to secrecy and admitted no one to this factory except he 
knew exactly what they wanted, and he was sure he would 
lose nothing by admitting them. But the secret was stolen 
and it was carried to France where it became the founda- 
tion of the Sevres pottery industry, and was also carried 
to other places. 

"This necessity for keeping inventions secret worked 
against the public in several ways. In the first place, a 
manufacturer could not manufacture freely when he had 
to swear his men, to secrecy and guard the factory from 
intruders and observe these other precautions, so that the 
cost of production was high and the output was low. And 
then, in the second place, there was usually some ingred- 
ient or some secret or step in a process which one man 
could attend to, and the discoverer would keep that to 



79 

himself, and he would perform that service. Now, he in- 
tended to give that secret to his son or best friend or pos- 
sibly to the public when he died; but men seldom knoAv 
when they are going to die, and so often the inventor 
would die unexpectedly, and this secret would pass away 
with him, and the result was there were many of these 
lost secrets or lost arts which may never be again discov- 
ered." (Edwin J. Prindle, X, 3-4.) 

Modern instances of public loss resulting from the non- 
discovery of inventions are not lacking. 

"I know of one instance," said an independent inventor, 
^Svhere a man invented a process for recovering arsenic 
from arsenical ores. Arsenic is a nuisance, and by this 
process the nuisance was not only done away with, but 
the arsenic was made a valuable product. They erected a 
plant to recover it, and the plant was nearly finished when 
the man who conceived the process died. If he had had a 
patent and had made his idea public, the invention would 
have lived, but after he died nobody could complete the 
plant or operate it, and that process is lost until some- 
body else stumbles on it, and anything which is done to 
make the value of a patent less is simply going to add to 
the tendency of the inventor to be secretive instead of 
making public his invention. That is to my mind the un- 
derlying difflculty." (Cortlandt F. Carrier, Jr., XXIII, 
31.) 

The "compulsory license," as has already been shown, 
offers the continual possibility that the exclusive right of 
the patent owner may be destroyed, and that the patent 
owner may be compelled, against his will and upon terms 
not of his own choosing, to share his patent with another. 

"There is a long line of decisions," said a representative 
of the Patent Law Association of Washington, "in the 
State courts and in the Federal courts pertaining to secret 
processes and secret inventions; and the rule of law is 
well settled, beginning back of the old Peabody-Norfolk 
case and running through 60 or 70 that I know of, that a 



80 

man who lias invented a process or a machine has the right, 
if he can, to keep it secret and use it for his own purpose 
solely. If any employee, confidential or under a duty to 
that employer, discloses that invention to another, that 
other can be enjoined from the use of that invention thus 
surreptitiously given out. And you can pursue that to the 
last man in privity with the discloser and prevent his 
use of it. Those are State court decisions primarily. There 
are also Federal court decisions to that effect, and I know 
of no opinion to the contrary. That is what you Avould 
have, a hiding away of these inventions. You would check 
progress immediately. You would throw out of employ- 
ment very promptly these large corps of skilled men Avhose 
whole time is devoted to improving and inventing new de- 
vices and machines and processes." (William W. Dodge, 
XXYII, 36-37.) 

'^Any quantity of inventions that are made," said an- 
other patent lawyer, ^'will, if there is a compulsory license 
provision in the laAv, be suppressed, because they will not 
be patented at all. The inventor will say,, 'I am not going 
to run the risk of having to give compulsory licenses. I 
will take the chance of somebody else rediscovering this 
secondary idea of mine.' And that Avould hurt the patent 
system beyond expression." (Frederick P. Fish, XXYI, 27.) 

The matter was summed up by one witness as follows: 

"It has been the experience of everyone with whom I 
have talked who is familiar with the subject that the in- 
stant you adopt a compulsory license scheme it will have 
the effect of either stopping invention or hiding aAvay in- 
ventions." (William W. Dodge, XXYII, 43.) 

No greater deterrent to the disclosure of inventions can 
be imagined than the enactment of the proposal for "com- 
pulsory license" contained in the present Stanley Bill. 



81 

VIII. 

FOREIGN EXPERIENCE WITH ^•COMPULSORY 

LICENSE." 

In its report accompanying the Oldfield Bill in 1912, 
the House Patent Committee sought to support its pro- 
posal for "compulsory license" by foreign examples. 

"In one form or another," said the Committee, "the laws 
of Great Britain, of Canada, of Germany and of France, 
as well as many other nations, lodge in the respective Gov- 
ernments the power to liberate the manufacture, sale and 
use of all patented articles. The ordinary method to ac- 
complish this result is to fix a period of three or four 
years, within which the owner of the patent may set about 
supplying the subject matter of the patent to the public. 
If he fails to do so within the stated time, one of two form? 
of relief is provided for ; in some countries the patent right 
is forfeited and the privilege of making and selling be- 
comes a right common to every one. In other countries, 
the oAvner of the patent by his inactivity brings himself 
within the terms of a compulsory license clause. The most 
of these statutes contain exceptions and reservations ; and 
in the last analysis whether or not the owner of the patent 
shall forfeit his rights or submit to the grant of a license 
is dependent upon a judicial inquiry and determination 
a^ to both the cause and effect of his inactivity. It should 
be said that in some countries it is within the discretion 
of the judicial officer to grant one or the other form of 
relief, either to forfeit the patent or compel the grant of 
a license." (Report, 4.) 

All the testimony on this point before the Committee, 
however, conclusively established three points: 

First, that the existing patent laws of the United States 
are superior to the patent laws of Great Britain, Canada, 
Germany, France and any other foreign nation. 

Second, that from the point of view of the public, the 



82 

inventor, the manufacturer, and the consumer, the provi- 
sions of the Oldfield Bill and the present Stanley Bill re- 
garding ^^compulsory license" are Avorse than the corre- 
sponding provisions of the patent laws of Great Britain, 
Germany,; France and other foreign nations. 

Third, that the experience of Great Britain, Germany, 
France and every other foreign nation that has tried any- 
thing resembling ^'compulsory license" as proposed by the 
Oldfield Bill and the present Stanley Bill proves that, 
from the point of viev^^ of the public, the inventor, the 
manufacturer and the consumer, ''compulsory license" is 
disastrous. , 

The 2:reat superiority of the American patent law was 
conceded by all the witnesses before the House Patent 
Committee. 

"The English," said a New York patent lawyer, "have 
followed our patent system and gradually adopted its prin- 
ciples, and not we followed theirs, and invention has been 
very much more stimulated in America than in England 
during this period." (Edwin J. Prindle, X, 10.) 

"In so far as the German system departs from the Amer- 
ican system," said an eminent patent authority, "I believe 
that in almost every respect, although not quite in all, it 
is inferior in its results. I think that the general impres- 
sion here and in Europe of those who are most familiar 
with both systems is that I am correct in that statement." 
(Frederick P. Fish, XXVI, 4.) 

"Our patent laAvs, although not perfect," said a famous 
inventing chemist, "are generally considered as a model 
of good patent legislation ; they were conceived in a broad 
and fair spirit, and the best answer to those Avho find too 
much fault with them is that in all foreign countries, in- 
cluding Germany, whenever a modification has been made 
in their patent laws, the change has always brought them 
a step nearer to the American patent system." (Dr. L. H. 
Baekeland, IV, 34.) 

"I do not knoAV of any country in Europe, and I know 



83 

them all very well," said the treasurer of a world-famous 
concern, ^^vhere the American patent is not considered of 
three or four times the value of the patent from his own 
Government. An owner in Germany, takes more pride 
and attaches more value to an American patent than he 
does to his German patent. The same is true of France, 
England, Switzerland, Italy, and all of those countries.'' 
(M. Dorian, VIII, 26.) 

Foreign patent laws in which ''compulsory license'' is 
provided for are all based upon principles fundamentally 
different from the American patent law. 

''It is true," said a Washington patent law^^er, "that 
nearly all the foreign laws provide for compulsory work- 
ing and compulsory license, but it is also true that the 
patent systems of all foreigTL countries rest upon a radical- 
ly different basis from that of this country. Here a pat- 
ent is a matter of right under the constitutional provision 
and the laws made pursuant thereto. Abroad it is a mat- 
ter of grace. 'I, Edward, by the Grace of God,' etc., 'out 
of my benign condescension, grant this to you,' with a lot 
of restrictions. It is because of the restrictions that are 
in that grant, and because it is a matter of royal preroga- 
tive that they were able to do what they did do under the 
Lloyd George Bill, attach conditions subsequent to the 
patent already granted." (William W. Dodge, XXVII, 40.) 

"This proposed provision of compulsory license," said 
a manufacturer with foreign experience, "is borroAved bod- 
ily from the English statutes, but without the safeguards 
of the English law., This provision may fit in well Avith 
the English needs and provisions, although there is room 
for doubt as to that, but it is entirely out of place in the 
United States and will not produce the results anticipated 
or promised." (M. Dorian, VIII, 19.) 

^'You can not compare that with the United States at 
all," said a patent lawyer of international reputation, "be- 
cause the conditions as to the laws and the enforcement 
of the laws of Germany and France particularly are so 



84 

utterly different from ours. Tlie rewards they offer for 
inventions are so much, greater in some directions than the 
reward we offer that, even if it is subject to a set-off by 
compulsory license, the balance is very much in their favor, 
in my judgment." (Livingston Gifford, XIV, 15.) 

The conditions which make it impossible to compare 
foreign patent laws with the American patent law, in re- 
spect to "compulsory license," cannot be here set forth in 
detail. They were briefly indicated, however, by several 
witnesses. 

"Germany abandoned the compulsory-license law, look- 
ing only to compulsory license where the interest of the 
public demanded," said the president of the Patent Law 
Association of Washington, "Now the interest of the pub- 
lic in Germany is entirely different in many ways from 
the interest of the public in the United States. In Ger- 
many, for example, the railroads are controlled by the 
government, and it might be that some air brake or sig- 
naling device would be taken by the German Government 
in much the same way as inventions of guns are taken 
from inventors of this country under the principle of 
eminent domain, as set forth by Chief Justice White in 
the recent case of Crozier vs. Krupp." (Walter F. Rogers, 
XXVII, 18.) 

The Patent Law Association of Washington summarized 
the whole matter with the statement: 

"The reference to foreign countries is not in point, be- 
cause those countries provide for far broader protecti(»ii 
under their patents than does the United States, protect- 
ing in fact substitute structures as well as the main one, 
a provision which is not practicable nor wise in this 
country." 

Even in countries whose patent laws rest on principles 
utterly contrary to American ideas and most congenial to 
the notion of ^'compulsory license," the provisions for 
"compulsory license," have proved in practice unsatisfac- 
tory. 



85 

"The experience under similar provisions of the patent 
laws of other countries/' said the vice-president of the 
Association just mentioned, "has not been such as to com- 
mend such provisions to this country. It should be said 
in this connection that the patent laws of the countries 
which contain such provisions are founded upon an en- 
tirely different basis and theory than are our patent laws, 
and that under their theory these provisions are more 
equitable than they would be in this country. But even 
though this be so, the experience in those countries has 
not been such as to commend such provisions to us." (E. 
W. Bradford, XXVII, 47.) 

"The Germans had working clauses," said the interna- 
tional authority recently quoted, "but by the efforts of the 
commissioner and some humble efforts on my own part, 
I think, we not only got this treaty through, which was 
made at the behest of this committee really, but the Ger- 
mans have abolished the working clause in their own law. 
Great Britain has one, but they are absolutely sick of it." 
(Livingston Gifford, XIV, 15.) 

This British law, Avhich the House Patent Committee in 
1912 seemed to rely upon as a precedent for its proposals, 
deserves attention. 

"I am going to give you a little history about that law 
in England," said a manufacturer with large experience 
in Great Britain. "Its introduction into the English law 
was an attempt to give the British manufacturer and the 
British workingman an advantage over his foreign rivals ; 
to confiscate for their benefit the inventions, discoveries, 
and processes of their more progressive and inventive 
American and German trade rivals. It was aimed at in 
the British patents issued to these foreign inventors, to 
acquire Avhich by confiscation was the purpose of the law." 
(M. Dorian, VIII, 19.) 

This statement is corroborated by Oliver Imray, Fellow 
of the Chartered Institute of Patent Agents, and Hugh 
Fletcher Moulton, Barrister-at-LaAV, in a paper Avhich they 



86 

read before tlie Sixteentli Congress of the International 
Association for tlie Protection of Industrial Property, held 
in London, June 4tli-7tli, 1912. 

^This alteration in tlie law," they said, ^'has had a 
serious and sweeping effect. It must be remembered that 
a patent has always been a somewhat doubtful prox)erty 
which capital has been very loath to invest in, because 
there are so many grounds on which a patent can be 
attacked. The passing of Section 27 has certainly intro- 
duced an additional and very serious and complicated 
ground on which the validity of every patent can be attack- 
ed after four years, thus rendering it far less secure as a 
property, destroying to some extent the monopoly of 14 
years hereto granted to a patentee and deterring capital- 
ists from financing the invention, and so introducing the 
industry into this country. * * * 

^'The results attained are infinitesimally small com- 
pared with the large number of existing patents, 100,000, 
eA^en after deducting from this number those patents 
which may be considered of minor importance; and this, 
in itself, is an absolute proof of Avhat a small call there 
was for this very serious and drastic alteration of the 
law, an alteration practically admitted by all countries 
from many years' actual experience to be a mistake. * * * 
For this very important result a slur on or an additional 
ground for questioning the validity of all the remaining 
patents stands out as a deterrent to the investment of 
capital for exploitng what may be very valuable iuA^en- 
tions. * * * The effect of the passing of Section 27 of 
the Act of 1907, Avhich we cannot help condemning as a 
retrograde step, has caused considerable agitation antago- 
nistic to British patentees in all countries of the world." 

Charles Dumont, delegate from the Grand Duchy of 
Luxembourg to the same Congress expressed the same 
view: 

"I certainly do believe that I am rightly interpreting 
the meaning of the majority of the British patent agents 



87 

by saying that the public are not really benefiting from 
these requirements as to Avorking." 

The practical operation of the British patent law fully 
justifies these comments. 

Any one, whether a British subject or a foreigner, can 
apply for an order under the British act. His motiA e is 
immaterial. It makes no difference Avhether he has any 
real interest in dcA^eloping British industries or not. ( Hat- 
schek's Patents, 26 R. P. C, 239, 243; Johnson's Patent, 
26 R. P. C, 57.) It is irrelevant whether the applicant 
shows that the order will dcA^elop any existing industry 
in the country, or lead to the establishment of any new 
industry. The order must be granted, even though the 
sole purpose of the applicant is to import foreign-made 
articles into the country free from the restraint of a 
British patent. (Hatschek's Patents, 26 R. P. C, 10, 
243; Johnson's Patent, 26 R. P. C, 54, 47.) The lack 
of a demand in Great Britain for the article protected by 
the patent is not accepted as any excuse for failing to 
work it. If the article is made anywhere else in the 
world, the patent OAvner must set about creating a demand 
for it in Great Britain. (Hatschek's Patents, 26 R. P. C, 
243; Boult's Patent, 26 R. P. C, 387.) It will not suffice 
the patent OAvner to show that he has made genuine and 
bona fide attempts to dispose of the patent, unless the 
Comptroller happens to agree that these efforts are all 
that a British business man should reasonably have exer- 
cised. The fact that a patent owner has done the best 
he can accordinor to the standard of his own countrv or 
the country where the article originated, is not enough. 
(Boult's Patent, 26, R. P. C, 387; Weber's Patent, 26, 
R. P. C, 306.) It will not suffice that the patent oAvner 
simply advertised that he desires to dispose of his patent, 
or sent around circulars to manufacturers stating that he 
wished to sell his patent or to enter into some Avorking 
arrangement AAdth somebody to manufacture it in Greai 
Britain. If the Comptroller finds that the advertisements. 



88 

circulars or other offers were framed vaguely, and gave 
no intimation of the terms on which the patent owner 
was prepared to treat beyond the statement that such 
terms would be reasonable, the order must issue. (Hat- 
schek's Patents, 26 R. P. C, 9, 248; Weber's Patent, 26 
R. P. C, 305.) Finally, the Comptroller may decide that 
the unlucky patent owner, besides advertising and offer- 
ing his patent to British manufacturers, ought also to 
have giA^en demonstrations of the invention Avithin Great 
Britain (Weber's Patent, 26 R. P .C, 308.) Considering 
that the expense of demonstrating an invention has been 
testified, by numerous witnesses before the House Commit- 
tee on Patents, to amount frequently to hundreds of thou- 
sands of dollars, the hardship of this requirement is 
manifest. 

These drastic conditions, be it noted, were all enforced 
in litigated cases by British courts intent on construing 
the law as humanely and liberally as it could be construed. 

Nothing in the British experience regarding "compul- 
sory license" affords any argument for its adoption by 
the United States. German experience, also, fails to fur- 
nish anv such aro^ument. 

"Germany, Avhich formerly had the working clause," 
said Dr. Baekeland, the president of the American Insti- 
tute of Chemical Engineers, testifying before the House 
Patent Committee in 1912, "decided since last May to 
drop the working clause, because it has given them so 
many difficulties." (Dr. L. H. Baekeland, IV, 41.) 

"Much has been said about Germany, and much that is 
not correct," added the president of the Patent Law Asso- 
ciation of Washington, "The truth is that Germany is 
getting away from the A^ery suggestions contained in these 
proposed bills and now has a "compulsory license only 
AA^here matters of 'public policy' and 'public interest' are 
involved, as stated by Dr. Baekeland." (Walter F. Rogers, 
XXVII, 12.) 

The purpose of this reservation in the German law, as^ 
already has been ox]dained, Avas chiefly to enable the 



89 

Government to obtain i'or its own use rights under patents 
applicable to Government activities. TMs right, it has 
been explained, is already reserved to the United States 
Government under the existing American patent law, and 
may now be exercised upon the principle of eminent do- 
main. (Crozier vs. Krupp, 224 U. S., 290, 1912.) The 
proposal for "compulsory license," it must be remembered, 
goes far beyond this feature of the German patent law 
and the existing American patent law, and seeks to estab- 
lish over every class of patents a land of eminent domain 
for the mere private, selfish purpose of whomsoever seeks 
to apply for a "compulsory license." 

The experience of foreign nations generally Avas sum- 
marized by Messrs. Imray and Moulton in their paper 
before the International Asociation for the Protection of 
Industrial Property above quoted: 

"The compulsory working of patents was at one time 
almost universal in countries having i3atent laws, with 
the exception of Great Britain and some of its Colonies, 
and of a few other countries. Even the United States at 
one time had compulsory working, but soon recognized 
that chis w?,s not for the good of the State and abandoned 
thy system." 

Nothing Id the example of foreign nations indicates 
that any ad vantage will be obtained by incorporating into 
the American patent law the proposal for "compulsory 
license." 



i)0 
IX. 



WILL '^COMPULSOEY LICENSE'' CONSERVE COM- 
PETITION AND INDEPENDENT BUSINESS 
AND THE PUBLIC WELFARE? 

The American patent system has so long been a matter 
of course that it is hard to realize how great a boon it 
is. 

^'No country has benefited more by its patent system 
than the United States," said the president of the Amer- 
ican Institute of Chemical Engineers, himself of foreign ex- 
traction, addressing the House Patent Committee in 1912, 
^'Compare the tremendous industrial development of such 
nations Avhich have liberal patent laws, like the United 
States, Germany, and England, Avith that of the Latin 
countries, where patent laws are less favorable to the in- 
ventor. There is one civilized country, Holland, which up 
till recently had no patent law whatever and allow^ed the 
unrestricted use of anj invention. This ought to have 
been the paradise of the infringers ; it was easy enough 
to use freely in 'Holland processes patented in other coun- 
tries, and to distribute from there infringing goods to 
all the countries of the world. Yet what was the result? 
Holland, with her highly developed commerce, her abun- 
dant money supply, with a race of intelligent and enter- 
prising men, remained industrially undeveloped, and still 
ranks as one of the least among the industrial countries 
of the world. Why? Because there Avas no incentive to 
saddle oneself with all the risks and outlays of starting a 
new enterprise or of improving methodsi of manufacture, 
knowing beforehand, that, in case of success, one's neigh- 
bor could simply do the same thing without any restric- 
tion whatever." (Dr. L. H. Baekeland, IV, 33.) 

The great inducement which the existing patent laws 
give to competition was emphasized by several Avitn esses 
before the House Patent Committee : 



91 

^'A patent law, easily enforceable — enforceable by the 
law as well as by the State — is the best and most effective 
policy for furthering some competition of the right kind — 
competition by improvement/' said the famous chemist 
last quoted. (Dr. L. H. Baekeland, IV, 28.) 

"The best weapon against monopoly that can ever be 
made/' said a leading independent electrical inventor, "is 
the efficient patent system that mil give the small man 
who has devised something that is a very great improve- 
ment — to give him such a, position that he is going to be 
able to develop a new line of industry, notwithstanding 
the fact that the old line has enormous wealth and power." 
(H. Ward Leonard, IV, 25.) 

"But for the patent laws," said a leading patent lawyer 
of Washington, "there would, probably, be but one print- 
ing-press company, but one typewriter company, but one 
electric company, but one adding-machine company, but 
one of many now listed in the thousands. A^liere there 
is noAV one combination, there would be scores." (XXVII, 
10; Walter F. Eogers.) 

"A patent, above all things," said an officer of the In- 
ventors' Guild, "is the best and the simplest and the surest 
way to guard against monopoly. An effective patent sys- 
tem is absolutely the best way to insure this company 
against the evils of monopoly. The patent system as it 
was planned in this country and as it would be effective 
as planned, is the best possible insurance against the evils 
of monopoly, because there is nothing so revolutionary as 
a good invention. A good invention necessarily is revolu- 
tionary as compared with the methods that have preceded 
it, and it is necessarily an efficient method of accomplish- 
ing and a more efficient method of accomplishing that 
which has been accomplished in the past in a cruder way. 
It is a saAdng to the Nation and a benefit to the Nation and 
a source of wealth to' the Nation. I believe that outside 
of the crop which grows out of our soil that there is no 
single source which has produced such great wealth for 



92 

this Nation in tlie past as the patent system." (H. Ward 
Leonard, IV, 7-8.) 

New and struggling concerns find in the existing patent 
laws their best weapon with which to compete against 
strongly entrenched businesses. 

Specific instances of young concerns that owe their rise 
from small beginnings to great prosperity by means of in- 
ventions protected by the patent laws, were mentioned by 
numerous witnesses. 

''Just as a concrete illustration," said a vice-president 
of the Patent Law Association of Washington, "of what 
the patent system really means to this country and to 
these people, I want to call to the attention of the com- 
mittee the situation at Waynesboro, Pa., a city with which 
I am familiar because I have for a long time been counsel 
for several of the manufacturing concerns located there. It 
is a comparatively small town of 5,000 or 6,000 inhabi- 
tants located at the foot of the Blue Ridge Mountains, in 
Franklin County, Pa., in the heart of a most fertile agri- 
cultural section. You will find located there the Frick Co., 
a concern that employs perhaps 600 men ; the Gieser Manu- 
facturing Co., that employs, I presume, as many or more ; 
the Landis Tool Co., employing perhaps 400 men; the 
Landis Machine Co., employing a smaller number, perhaps 
200; the Fred Frick Clock Co., a prosperous concern; and 
a number of other smaller concerns whose business is en- 
tirely based upon patented articles. The business in each 
instance was begun in a small way, by the manufacture 
of the inventions of local men; begun by local capital; 
built up by the merits of the inventions and the ability 
and enterprise of those at the head of the concerns. In 
each and every instance, I think, the stock is owned almost 
wholly by the townspeople, and the country people around 
that locality. I am told that on the occasion of the ann- 
ual stockholders' meeting of any one of those companies 
one would suppose, a town meeting was being held; that 
dozens and dozens of farmers, merchants, and others. 



93 

scattered over the country, own 3, 4, 5, 10, 20 or 25 shares 
of the stock in those respective companies, and they all 
attend the stockholders' meetings and take an active in- 
terest in the affairs of the companies. 

"^ow, gentlemen, those companies have each grown 
from an insignificant beginning — ^practically nothing — un- 
til today each and every one of them is an important fac- 
tor in the industrial and material welfare and prosperity 
of that community. With 1,500 to 1,800 artisans having 
regular and constant employment at good wages, with 
the earnings of those concerns being distributed among 
the people of the community in the way of dividends, with 
the market for farm produce and garden produce thus 
created right at their doors, the merchant, the farmer, and 
all classes are wonderfully prosperous and consequently 
happy. No one can deny that that community has cer- 
tainly been benefited more by the patent laws of this 
country than by any other laws upon the statute books. 

"That is but one example. It can be multiplied in- 
definitely throughout the State, throughout adjoining 
States ; and I can give you other instances in the State of 
Indiana where I know of localities and communities that 
have been greatly benefited in identically the same way — 
groAving from practically exclusively agricultural com- 
munities to communities with important manufacturing 
and commercial interests, by some small beginning in the 
manufacture of a patented article that has grown and 
brought these great benefits to such communities.'' (E. 
W. Bradford, XXVII, 45.) 

"There are many businesses in the United States that 
have built on the inventions of their presidents," said an- 
other patent law^^er. "You take the Ferracute Machine 
Co. of Bridgeton, N. J., the company Avhich makes the 
Government presses for the mints for coining metals, and 
that company is built on inventions of the president of 
the company, Mr. Oberlin Smith. * * * The Potter & 
Johnston Co. of Pawtucket, K. I., which makes metal 



94 

shaping macMnes; that is also built on the inventions 
of Messrs. Potter & Johnston. They are both prosperous. 
* * * Many inventors are employed by companies that 
put their inventions into their own businesses, and they 
get bonuses for the inventions, or they get permanently 
larger salaries for the inventions which they make, and in 
that way the company is able to keep abreast of competi- 
tion, and the inventor himself is assured an adequate re- 
turn. * * * The Calculagraph Co. of Ncav York, Avhich 
makes the machine for the telephone people, to measure 
the length of time that you talk, when you are charged 
according to time; the business of that company is based 
on the invention of the president, Henry Abbott. He is 
president of the company and built up the business. He 
not only made the invention, but introduced it and built 
up the system of manufacturing it. There are very many 
such companies in the United States where the inventor 
directly gets the benefit of his invention.'^ (Edwin J. 
Prindle, X, 19-20.) 

How "compulsory license" would destroy competition 
and build up monopoly was well described by the patent 
counsel of a well-known manufacturing concern: 
. "This act, as a whole, is for the benefit of the big fellow 
as against the little fellow. First, by increasing litigation. 
The big fellow can stand it; the little fellow can not. In 
fact, the big fellows are accused of fomenting litigation 
to the detriment of the little fellows. There can not be any 
doubt but what this act will increase litigation enormous- 
ly." (Livingston Gifford, XIV, 19.) 

The demoralization which "compulsory license," would 
introduce into the manufacturing of highly developed 
machines, for which a considerable number of patents 
had been used or experimented with, is easy to guess. 

"When the Government says to the inventor at the 
end of two or three* or four years," said the president of 
the Patent Law Association of Washington, "you must 
grant a license to anyone who asks for it or to anyone 



95 

witli wliorn a bureau official or a court thinks should have 
it or you must work your inyention or lose the patent; 
that is simply, in effect, limiting the term of the patent 
to that time and putting a ruinous burden on all except- 
ing those favored few who with great capital are enabled 
in some manner to work many patents and to vigorously 
contest all applications for licenses. 

^'Such a provision is also on its face a temptation to 
oppression, a temptation to perjury, and, in its practical 
workings, would put into the hands of the bureau oHicial, 
with no exj)erience w^hatever in the property rights in 
volved in patents, the settlement and disposition of those 
property rights; and, if the jurisdiction be given, a court 
invites additional litigation, which will be only a guessing 
contest. 

"By the proposals of this bill, H. R. 23417, if they 
should become law, no matter hoiv near the goal, the in- 
ventor may see all his hopes slip away into the hands of 
rivals who have given nothing to the public, into the 
hands of the very combinations his invention would ulti- 
mately have checked." (Walter F. Rogers, XXVII, 11.) 

'^You will bear in mind," explained a Boston patent 
lawyer, "that there is not a machine of the larger type 
made by Brown & Sharpe or any of the concerns doing the 
big business of this country that is not based upon a long 
line of patents. Some of them expired years ago, but 
there are many patents on each of the present machines. 
Take the automatic loom, for instance. If you look at a 
loom, you will find upon it a list of 15 or 20 patents. 
The loom is not patented as a Avhole under one patent. 
It may be that there are half a dozen patents on some 
individual section of the machinery; half a dozen ideas 
so interwoven that while by analysis you can separate 
one from the other, you can not in looldng at the section, 
pick out one patented combination without seeing at the 
same time two or three more patented combinations inter- 
woven with it. No machine that is of any great conse- 



96 

quence is protected by a single patent. That is not the 
way tMngs work out, and it is not a condition that arises 
in manufacturing to a practical extent. 

*^The result is that even if a manufacturer has a patent 
which might be used on a particular machine, made by 
him, but which for any reason is not used, no other manu- 
facturer could by obtaining the right to use the patent 
in question incorporate it into that machine without at 
the same time obtaining the right to use a number of 
other patents which are used in the machine * * *. 

'The mere possibility of a compulsory license will be 
fatal. It is obvious that if a situation is developed in 
Avhich there is no courage to develop inventions, they will 
amount to nothing if made and progress will cease. But 
more than that, if such a situation is created, there will 
be no encouragement to make inventions, and men will 
no longer make them. Invention will cease. * * * 

^'I should feel it was my duty, if there were any compul- 
sory license clauses in the law, to say right away to my 
clients, 'Be careful; change your entire system of inven- 
tion. Get up just what you need, and nothing else, 
because everything that you get up and do not use — and 
you can not use one-tenth of what you get up, — may be 
taken away from you, to the great advantage of your com- 
petitors and to your great loss." (Frederick P. Fish, 
XXYI, 14, 24, 25.) 

Large-scale invention and industrial experimentation, it 
has been shown, are necessary in order to solve the prob- 
lems of existence presented in the immediate future. "Com- 
pulsory license," it has been shown, Avould utterly 
demoralize such activity. How ''compulsory license" 
would surely hurt the public welfare, one Avitness explain- 
ed by citing an instance coming under his oaati observa- 
tion : 

"I^ is for the interest of the people at large to intro- 
duve, to make, and promote and extend inventions. Those 



97 

are the things upon which too little stress has been placed 
in the discussions before the committee. * * * 

^^I mean such world-moving affairs as this. You take 
the manufacture of nitric acid and nitrous products from 
the air. The introduction of that into the United States, 
everybody will agree, will be a wonderful benent, because 
it ultimately means the cheaper manufacture of fertilizers. 
Fertilizers now come from deposits in Chile or Peru that 
are gradually being absorbed, and it is estimated that in 
the course of 40 or 50 years they will be used up. The 
inventors now are endeavoring to introduce this wonder- 
ful industry of getting the nitrogen from the air for the 
purpose of manufacturing nitric acid and fertilizers. Well, 
if you wish to introduce that into the United States, you 
must offer the inducement to have it introaucea into the 
United States. * * * 

"I had to adjourn negotiations when I came here, in- 
volving an enormous sum of money — involving the intro- 
duction into this country of an industry which is estab- 
lished abroad, and which it is for the interest of every- 
body in the United States to have taken up in this coun- 
try. It involved an investment of an enormous amount of 
money here for the first plant, even to determine whether 
the thing is worthy of being advanced into other plants. 
If I were to tell the United States representatives of those 
people that this bill was likelv to pass, they would drop 
those negotiations in a minute, and that industry would 
not be introduced into the United States and would not 
be developed here. I cannot mention the names of those 
people, but it is a fact and it is perfectly appalling." (Mr. 
Livingston Gifford, XI Y, 22, 14.) 



98 

X. 

SHOULD PROPERTY IN INVENTION, ANY MORE 
THAN ANY OTHER FORMS OF PROPERTY, BE 
SUBJECT TO CONFISCATION? 

The present Stanley Bill, in its provisions for ^'compul- 
sory license" already described, stigmatizes as improper, 
whenever patents are involved, what is permissible accord- 
ing to the existing law and proper according to legitimate 
business practice, whenever other forms of property are 
involved. 

A Washington patent lawyer proved this before the 
House Patent Committee in 1912 by citing the example of 
the farmer: 

"If he elects to keep his horse or his ox in idleness, 
no one would question his right. He may own a fertile 
and most productive field, and elect not to cultivate it. 
No one questions his right to do as he will with his own, 
so long as he keeps within the general laws. AVhy should 
common rights accorded to everybody in the enjoyment of 
every other class of property be denied to the owner of 
patent property? He acquired his title honestly. He com- 
plied with every condition of the law. He has dedicated 
his invention to the public for its free use and enjoyment 
at the end of the brief period of 17 years. Why should 
he be molested in the enjoyment of his oAvn as may suit 
his OAATi ideas and purposes? The Government has given 
him nothing; he has taken nothing from the public. If 
the invention is of value, the debt is due from the public 
to the inventor and not from the inventor to the public. 
It would seem, therefore, chat the proposition to deprive 
him of the enjoyment of his own as he sees fit is propos- 
ing an imposition on private rights of the most objection- 
able form. Nor would the interests of the public be served 
by imposing conditions and restrictions which Avould dis- 
courage the iuA^entor and put a damper upon him and 



99 

those associated with him in producing and developing his 
invention.'' (E. VV. Bradford, XXVII, 51.; 

*'Xo one proposes/' said a Avell-knoAvn inventor and 
editor, ^'that the principle of 'compulsory license' be ap- 
plied to landed estates or to any other form of property^ 
liowever it may have been acquired. Patents are treated 
as if they were privileges, when, as a matter of fact, a 
patent to a valid invention of economic and social value 
is merely a public recognition of an inherent right. If 
there is reason why the inventors should be compelled to 
divide their property rights with others, who have in 
no way contributed to their development, especially along 
the lines proposed, there is even greater reason why the 
same principle of extraction should be made operative 
against other forms of private property rights. It does 
not promote che progress of the useful arts to expose the 
inventors to dangers which they cannot meet." (Joseph J. 
O'Brien, XXVII, 97.) 



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